View from the top


Published: Monday, December 18, 2017

View from the top

 

Confident and with all its bases covered to face whatever the future throws at it, Emirates SkyCargo, is at the top and intends to stay there. Munawar Shariff chatted with Nabil Sultan, Divisional Senior Vice President - Cargo, Emirates SkyCargo, for his take on the status of the industry, business at Emirates SkyCargo and trends and disruptors to watch out for

 

As we continue to progress, we have a working group that looks at various opportunities across the globe whether they be at optimising our fleet across the networks and their network looking for opportunities where we can support each other. We see new regions and new markets emerging for next year mainly around South America where we see the economy shaping up and rebounding. There will be lots of opportunities there for which we will need to assess, evaluate and make the decision. The region is catching up and soon it's going to be widespread, countries such as Saudi Arabia, Pakistan, Africa are huge markets. There is so much opportunity in this part of the world

 

Emirates is definitely poised to cater for this massive e-commerce business that we're seeing emerging. Our whole concept of design is the hub and spoke and our whole network is dependent on conducting traffic West to East and East to West. Unlike the hoteliers who are stuck with big properties in a destination and if the demand of the consumer shifts they're still stuck there! We have the flexibility of moving our asset to where the demand is

 

Emirates SkyCargo currently connects more than 155 destinations over 80 countries using a young and fuel efficient fleet of 255 modern wide bodied aircrafts which include 14 dedicated freighters to more than 45 scheduled global destinations 16 of which are freighter only. With the world’s most modern and fuel efficient fleet. The carrier is on the number two spot on the top 25 cargo carriers list compiled by Air Cargo News. It has been on this position for a couple of years now. Nabil Sultan, Divisional Senior Vice President - Cargo, Emirates SkyCargo is upbeat and confident as we sit in his office and talk about the industry outlook and overview.

 

“Every year is a new challenge, but we can't complain, honestly,” he says. “This year has been a lot better than the last eight years. We have witnessed demand improve and increase. Business outlook looks very good, we have seen a huge improvement in the uplift and quality of cargo.”

 

And they are raring to go into 2018. “There are a lot of things on the agenda for the coming year. With the US economy doing so well, a lot of the Asian carriers have shifted their capacities across the Pacific, leaving a vacuum in capacity to Europe, Middle East and Africa. And we made good use of this opportunity to operate on these routes and manage this reduction simultaneously improving the quality of our business. The outlook for 2018 definitely covers this, as I see a strong US economy on the horizon. If that continues, we’re likely to see more of the same trend over 2018 and 2019 with probably some adjustments and shifts taking place. Our job will be to manage this demand and then spread it over our network of Europe, Africa and Middle East.”

 

IATA has published a very strong demand for air cargo from five to six per cent across Asia, US and Europe. “The forecast for Europe is to a lesser extent, but we see demand growth into these key production markets and of course because of the shift in a lot of that capacity as we discussed earlier, we have to be prepared and align our capacity to ensure that we are able to meet this growing demand in these new parts of the world.”

 

In this year, as the airline continues to expand with new destinations and higher frequencies to existing destinations, Emirates SkyCargo has noticed an ongoing growth from Hong Kong, one of the world’s key production markets and instantly increased their capacity from 22 freighters a week to 28 freighters a week. “The big improvement we see is in how Hong Kong continues to remain a key production market for us, demand has been very consistent throughout this year which is interesting to see therefore we have added more capacity we have almost eight more flights (six additional) in addition to our 28 passenger flights per week, this I feel is a substantial capacity for one market. In China we have adjusted our frequency for our passenger belly capacity that we are currently offering. For Europe, we're looking at different cargo hubs to launch operations to. We started this year by launching Luxembourg as one of our key destinations through our partnership with Cargolux which has helped us to enhance our frequency. It is critical for us to ensure that we move cargo across the network as there is somewhat of a repositioning taking place deep in Europe.”

 

The partnership with Cargolux allows both carriers to enhance their networks and bring in

new streams of cargo without any additions to their existing fleets. “The basic fundamentals of our partnership with Cargolux is very simple. They recognise the importance of aligning themselves with a networked airline which gives them a reach and destinations which we offer and we realise the importance with regard to positioning substantial capacity in key production markets with their freighter operation which is quite critical for us. It therefore gives us the ability to use their key production markets to bring in cargo.” Win win for both, really. “This also means that Cargolux positions one of its 747 freighters at Dubai World Central for our exclusive use, this has been great from our perspective as we have been able to return one of our leased 747 freighters. As we continue to progress, we have a working group that looks at various opportunities across the globe whether they be at optimising our fleet across the networks and their network looking for opportunities where we can support each other. Commercially, however, we continue to remain completely apart we still market and sell our product individually and they do the same. But other than that, for operation and network optimisation aspects we are working very closely together.”

 

While continuing its commitments and partnerships, the carrier continues to identify new source markets and regions. “We see new regions and new markets emerging for next year mainly around South America where we see the economy shaping up and rebounding. There will be lots of opportunities there for which we will need to assess, evaluate and make the decision on those routes later on in this coming year. There are many opportunities

across Africa where we are almost like a national carrier considering the number of flights we do. Especially key areas such as South Africa, Nairobi, there is a consistent production of perishables originating from there. So a lot more could be done within a year or so.”

 

Emirates SkyCargo realises that traditional business formats are changing and that the biggest disruptor - e-commerce - is changing the landscape completely with regard to cargo. “We see it happening,” says Sultan. A lot of retailers across the globe are downsizing or shutting down brick and mortar stores, or have a smaller physical presence with the bulk of the collection available online. “The region is catching up and soon it's going to be widespread, countries such as Saudi Arabia, Pakistan, Africa are huge markets. There is so much opportunity in this part of the world. All the big global online players, we are working with and each one is in the process of consolidating their position to have a presence in the emerging markets. Because the question really is are we still going to be transporting big boxes of cargo to retail stores or are we going to be carrying smaller shipments to individuals. So the whole dynamic changes and businesses have to realign themselves. But Emirates is definitely poised to cater for this massive e-commerce business that we're seeing emerging. Our whole concept of design is the hub and spoke and our whole network is dependent on conducting traffic West to East and East to West and therefore if we just take the model and replicate it on e-commerce of moving and delivering shipments in the shortest elapsed time simply because our network is designed such with immediate connectivity we probably are the fastest in the world today and be able to deliver. For a successful e-commerce business all the fundamentals exist within our airline today. And getting this (fundamentals of network connectivity) right is probably the most difficult and most expensive component - creating the right product and then plugging it into the e-commerce model.”

 

Sultan gets it right again when he says, “Every company’s vertical works with the factories of the world - China, Vietnam, Bangladesh, Sri Lanka - the locations of which will not change. So this is where our already established network and connections will come in handy. For instance in the case of pharmaceuticals, India is the biggest manufacturing market for pharmaceuticals, we carry huge pharma quantities from Bangalore, Chennai, all the way to Chicago. A lot of the pharma manufacturing companies in Europe are closing down or downsizing. So the whole dynamic is changing, it's extremely competitive. Also, the political situation in the US seems to imply that the manufacturing industry is gaining a revival, let’s see what actually happens eventually.”

 

Sultan feels the biggest advantage of the air cargo industry is the ability to make and implement decisions as things change in the global market. “Unlike the hoteliers who are stuck with big properties in a destination and if the demand of the consumer shifts they're still stuck there! We have the flexibility of moving our asset to where the demand is I think that's probably one of the success factors that Emirates has that we can act on our decisions immediately, we can shift capacity as per demand immediately where it needs to be. I don't even need to get involved, the guys on the floor manage to make that decision and move on with that agility and flexibility.”

  

We also chatted with Julian Sutch, Manager Cargo Global Accounts, Emirates about the carriers pharmaceutical business. What capacities are you handling at SkyPharma since opening last year?

In the year since the opening of our dedicated pharma facility in Dubai in September 2016, we have transported over 51,000 tonnes of pharmaceutical cargo across our network valued at an estimated US$ 11.5 billion. The volume of pharmaceuticals that we transport across our global network has witnessed very strong growth. In the first nine months of 2017, we saw our pharma volumes higher by about 25 per cent compared to the same period in 2016.

 

Tell us more about Emirates Pharma, Emirates Pharma Active and Emirates Pharma Plus.

Emirates Pharma is Emirates SkyCargo’s complete solution to customers who would like to transport their temperature sensitive pharmaceutical shipments. We have developed three levels of innovative transport solutions based on a requirement mix that includes the temperature sensitivity of the product, the packing solution used by the pharmaceutical manufacturer and the origin/ destination of the shipment.

Emirates Pharma has been designed for pharmaceuticals with a high tolerance to temperature fluctuations and those in passive packaging solutions, Emirates Pharma Active  is ideal for high value pharmaceuticals with a thermal cover that can withstand minor temperature fluctuations during handling and transportation and Emirates Pharma Plus is ideal for high value pharmaceuticals that are extremely temperature and time sensitive, and need to be transported in active containers.

 

How have partnerships with SkyCell and va-Q-tec enhanced the services SkyPharma can provide and hence improve business?

Its giving new options to our customers. All pharma manufactures go into great detail when validating equipment for their products to be carried in, these containers have different benefits to the other containers currently on the market. Our partnership means customers can take the lease of the container through Emirates. The benefit of the SkyCell partner shipment is that Emirates have our own stock of SkyCell containers in Dubai preconditioned and ready to be positioned across our network.

 

Tell us more about SkyCell.

The technology used by SkyCell is different to the other container suppliers, they do not require electricity or dry ice to keep the temperature. They work on very specialised insulation and phase change material to keep the temperature. So where there are airports with limited infrastructure eg. no electrical plug points or dry ice availability, these container continue to operate without compromising integrity of contents.

 

What is in store for 2018 and beyond in terms of the enhancement in the pharmaceutical transportation solution by Emirates Sky Cargo?

Emirates SkyCargo believes in constant innovation keeping in focus the requirements from our customers. The pharmaceutical industry continues to evolve rapidly in terms of product and transportation needs and we are working closely with our customers to develop solutions that add value to our customers.

 

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