Innovation key to boom in cargo volumes
When it comes to aviation, Nasir Jamal Khan, Chief Executive Officer, Al Naboodah Travel and Tourism Agencies, stands out prominently in the field of international travel. He has a career spanning three illustrious decades in the region. He shares valuable insights into the business of air freight management and its impact
How has the logistics and cargo industry handled the pandemic?
Logistics companies, involved in the movement, storage and flow of goods, have been directly affected by COVID. As an integral part of supply chains, both within and across international borders, logistics companies facilitate trade and commerce and help businesses get their products to customers.
Logistics was affected by the disruption to global supply chains, constrained cargo capacity, broken links, and affected world trade and business. But the industry adapted quickly to meet worldwide demand for service continuity. Industry players realigned their fleet capacities and re-engineered their operations to accommodate shifting trade and consumers patterns amidst the most challenging circumstances. The companies embraced innovative solutions to help overcome roadblocks and maintain operations. Because of higher air cargo freight rates, resulted in blank sailings and longer transit time for trucks.
Air freight: Volumes decreased by as much as 19 per cent in 2020-21 due to a reduction in passenger flights, which carry freight as belly cargo, and drop in manufacturing in China. However, as shippers and the governments turned to air cargo for shifting essential goods, air freight rates increased—some carriers are also witnessing delays due to congestion at airports. Mid-April saw an increase in cargo capacity, as well as recovery in volumes transported, although they are still down year-on-year. The overall reduction in capacity is greater than the net drop in demand, which supports higher air freight rates .
At present, the air carriers have an advantage—as not all sea, rail and road routes functioned due to various disruptions caused by the pandemic. Air carriers can tap customers and offer them a competitive solution for their logistics needs to protect their products in multiple markets. Freighters can help the customers by store their goods, and in a time-bound manner.
“Going forward, we have seen an increased dedicated air cargo capacity. The airline industry is already reallocating fleet to exclusively serve air cargo demand.”
What is the strategy adopted by your company to manage the demand of international logistics and cargo?
The impact on the General Sales Agent (GSA) business is positive as well as negative. The negative impact of commercial flights have reduced and cargo capacity along with it. But this has forced us to find new solutions and to innovate to support our clients who need our support more than ever given the pandemic situation. This has strengthened our role, allowing us to be an essential ally in maintaining our clients’ activity levels and assisting them in their recovery. For example, we do this by finding solutions to increase revenue with freighters and cargo charters.
• To better market our customer airlines, GSA cargo services develop individual business plans for each client. These plans are designed to increase marketshare, set up a broad client base, and heighten the airline’s profile.
• Promote the carrier’s cargo network and uplift capabilities.
• Offer new opportunities through SPA agreements from the UAE.
As the GSA to several international airlines, what is your company’s strategy to deal with the cargo divisions of each competing airline?
Our objective is to serve our customers with the same commitment, integrity, and hospitality, fueled by a dedication of dynamism, efficiency and quality to meet the ever changing and challenging requirements of the cargo industry.
What are some of the current trending issues that the cargo industry in the GCC region is dealing with?
Air freight rates will continue to be inflated as the belly-cargo capacity of the passenger aircraft remains limited, and the introduction of new aircraft into the market is slow. Sentiment in the air cargo industry indicates that air cargo rates are likely to continue to increase in the near future, but surcharges from the cargo carriers are likely due to network disruptions, surging fuel prices because of the Russia-Ukraine conflict.
Closure of the Central Asia airspace will bolster air cargo capacity restrictions. The air cargo demand continues to outpace the cargo capacity in the market as of March 2022, with air
freight remaining limited and dedicated freighters proving unable to meet demand.
Increasing pharmaceutical and healthcare cargo is driving the market. The pharmaceutical market of Saudi Arabia is considered one of the fastest-growing one, with export potential to serve Middle East and North Africa (MENA) region and Organization of Islamic Countries (OIC) having a total market of US$120 billion. -Abigail Mathias