By Joanna Ripard www.timesofmalta.com
Sky Cargo, Emirates Airline’s air freight division, sees strong growth potential for its operations in Malta, Ram Menen, divisional senior vice-president, cargo, at Emirates Airline, told The Sunday Times.
The airline, the second largest cargo carrier in terms of weight operating to the island after Air Malta, runs a daily wide-bodied inbound and outbound service to Dubai capable of carrying high- volume shipments.
Mr Menen was in Malta for a short stint last week to address the Chartered Institute of Logistics and Transport International Convention on Wednesday. An engineer by training, he was one of the founder members of the International Air Cargo Association, the global sector’s foremost organisation, and has worked hard over the years to focus attention on cargo as an integral part of the world trade process.
“It is important for us,” he said of the Malta route. “Every government that wants to have an export-based economy must allow capacity in. In Malta, 90 per cent of the cargo travels through passenger aircraft bellies – that belly capacity is extremely important for the country.
“Much of the activity here is supply chain operations – our expertise in cargo is to create that business supply chain in itself. The sustainable activity that a country embarks on needs capacity, and we see a lot of opportunities here. It is in our interest that the country grows.”
Mr Menen said that Sky Cargo’s freighter fleet – it currently has seven in operation, besides 139 passenger aircraft, and a further $49 billion’s worth on order – allows the operation to up-size its capacity as the need arises to boost the core capability in passenger bellies.
He hoped the airline would be able to deploy some of its main cargo assets to the island as the market grew.
Country manager Paul Fleri Soler added that the carrier was supporting many of Malta’s new industries and was also involved in carrying bulky aircraft components for clients in the aviation industry.
Fresh out of the latest emergency to hit aviation, Sky Cargo is awaiting the findings of a post-mortem into the industry’s reaction to the ash cloud crisis, which appeared to offer more questions than answers.
The airline had 6,500 passengers and 1,850 tonnes stuck in the affected areas, but Sky Cargo cleared its backlog in just 48 hours after European airspace re-opened. Some perishables were disposed of according to clients’ instructions.
Since it was established in 1985, Sky Cargo, Mr Menen said, had overcome many crises. The difference in recent years was that economic activity tended to bounce back very quickly. Cargo activity – which, Mr Menem explained, was often a good barometer of economic strength – was the hardest hit sector in aviation in the global downturn.
In 2007, Emirates’ management teams, which were accused of being too optimistic, took on new passenger aircraft and freighters, and right-sized cargo capacity without shedding jobs to prepare for the worst-case scenario just before the economic crisis hit. In hindsight, Mr Menem believed the airline was not optimistic enough, as the markets behaved exactly as Emirates predicted they would in the beginning of the downturn.
He explained that the automotive crisis hurt the cargo industry badly and the Middle East market went into a slight negative, but with its geo-centric advantage at its Dubai base, Sky Cargo offered the best gateway into Africa, which maintained its momentum. The Indian sub-continent proved very strong, while China began to gather pace around July last year.
At the same time, maritime trade went down by 26 per cent; compared to the 22 per cent loss in the 1930s, the quantum of the trade in itself was huge in real numbers, Mr Menen pointed out.
While the Great Depression took 15 years and a war to overcome, many regions needed just a year to emerge from the latest economic crisis. He believed economic cycles are currently being reset – rather than running for just up to 24 months, they will soon last between four to five years as they used to decades ago.
From the beginning of the first quarter of this year, the air cargo market has proven stronger than anticipated, although the ash cloud crisis will distort comparisons. Sky Cargo now expects the last two quarters to be “extremely strong” so that activity will revert to 2008 levels by mid-2011, six months earlier than expected.
Mr Menen pointed out that the US remained the largest consumer market which spurred economies in the East. The ‘wild card’ elements to monitor were the price of oil and the Greek crisis’ effect on currencies.
“A weaker euro at this point in time will boost Europe’s exports and help create a better balance of trade with the Far East,” he explained.
“If the crisis had continued beyond a couple of years, there would have been concern on the globalisation process and there would have been more regionalisation, but globalisation is here to stay. It has recovered so quickly, the world will continue to leverage high productivity and cheaper labour skills in the East and we will see the globalisation of markets and industrialisation.”
He added that India will be a major – and growing – export market; India and China, both of which were insulated by their considerable domestic markets, will become strong consumer regions.
Sky Cargo considers the Middle East and Gulf countries to be very promising regions for its business, boosted by the rebuild in Iraq and Afghanistan. The airline is adding strength to its distribution capabilities in Africa, where many countries are leap-frogging technology as they are able to introduce the latest platforms to their brand new markets.
By operating from Dubai – which Mr Menen insisted, recently got more bad publicity than it deserved, and a little economic slowdown served to decrease the tempo of the city’s hurried growth – Emirates is in a powerful position, and bracing itself for further expansion.
Sixteen new freighters will join the fleet over the next few months, while the passenger operation is taking delivery of a new aircraft every month. The airline’s capacity deployment is balanced so that capabilities are relatively easy to optimise across its 100-plus destination network.
Although yields fell to an all-time low last year and the industry is working to return to sustainability, Emirates continues to invest in technology and communications. Mr Menen himself is actively involved in the development of various IT initiatives industry-wide.
Meanwhile, Dubai is preparing to officially open Dubai World Central, the 140-square-kilometre urban aviation community surrounding the world’s largest airport where one million people will live and work, on June 27. With five runways, the airport will handle 180 million passengers and 13 million tonnes of cargo a year. It features the added advantage of a 10-kilometre freight corridor from Jebel Ali port with no customs interaction to allow for shorter delivery times.
“Apply the technology of tomorrow and we could probably process double that amount through the same space,” Mr Menen pointed out. “It will be a powerful distribution and logistics-related activity area.
“A country’s success depends on its logistics infrastructure, both internal and external. People often ignore road transportation, but that is extremely critical for us. All these factors are ‘greenfield’ so whatever is needed to optimise commercial activity can be done.”