The latest expansion saw a new twice-weekly B777 Freighter service to Los Angeles initiated from 4 April, becoming the carrier’s fourth US freighter destination alongside Houston, Chicago and Atlanta. The new addition will provide 100 tonnes of cargo capacity per flight, departing Doha via Luxembourg and Mexico to Los Angeles International Airport. This comes on top of recent new routes to Hyderabad, Stansted, Mexico, Shanghai, Gaungzhou, Brussels and Accra, to name only a few.
With 47 current maindeck destinations and another 146 passenger destinations where freight is also moved, Qatar Airways chief officer cargo, Ulrich Ogiermann explained: “It’s really on all parts the world that we are trying to roll out and obviously there’s cooperation and ordination with the passenger people.
“We’ve had frequency increases on many routes where we have simply a better schedule for us and we can make more use of the increased belly capacity.
What’s really on all sides is that we are expanding rapidly, we’ve had very strong growth over the last couple of years and are now amongst the top five cargo operators worldwide.”
Foundations for growth
There are a number of factors for the cargo division’s growth – both focused strategy and serendipitous factors – that have clearly helped Qatar’s meteoric rise amongst the ranks of the world’s cargo carriers. A near single-mindedness to build a quality product and importantly, a strategy that is backed up by investment in modern aircraft, IT systems, hub infrastructure and also people.
“We really want to be the air cargo provider of choice – when the customer thinks about air cargo we want them to be able to say ‘Qatar Airways is a great company and we would like to make use of the services’. That’s the ultimate goal we have and we do this by providing superb quality and I think we’re on the right track,” he says pointing to the opening last year of a cargo facility its home hub at Hamad international Airport which has a capacity of 1.4 million tonnes, as an example.
Already the carrier is looking at a second cargo terminal that Ogiermann says will move into the design phase shortly. “We’re also rolling out a new IT system which is very important for us and will have all the necessary tools to complete tracking and tracing in real-time.”
While it rolled out its pharmaceutical product in 2013, the carrier recently took it up a notch with the launch in January this year of a new ‘Pharma Express’ service linking two major pharmaceutical origins – Brussels in Belgium and Basel in Switzerland, with the airline’s network through Doha, in order to serve the global pharmaceutical industry. The new express service for pharmaceutical and healthcare industry will be served by the A330-200F with both an active solution offering temperature-controlled containers and a passive solution allowing the product to be kept at a predefined temperature band at all stages of the journey.
“We also have cool trucks operating in the hub and pharmaceuticals for instance arrive we put them on reefer trucks and this a real competitive edge, so overall in a nutshell we really want to be a provider of choice to our customers and really be the one that is the driving force in terms of air cargo quality for the sake of our customers.” On the serendipitous angle, location is obviously the prime factor, but so too is age.
“The geographic location that we have is very favorable – we’re in the middle of a lot of very strong cargo markets so we can operate with higher load factors then probably most of the competitors. And we don’t have to operate thin roots with very large aircraft so we can really tailormake the capacity on various routes with our B777Fs and A330-200Fs”.
Indeed this is where the age factor comes into play. Being younger in the business means not being burdened by older, larger capacity that is a challenge to operate efficienty in the current market. “In this current market situation it’s probably a good situation to be in because the B777 is much more efficient and more versatile than the B747-400s, Ogiermann said.
“Operating very large aircaraft means you’re running a much higher risk because there’s not any more many cargo markets where are you can operate on a point-to-point basis and fill them up on both ends. And so you have to hop around with the aircraft if you’re operating the big ones like the B747-400 or B747-8, when you’re forced to hop around that destroys all your operational benefits.”
As for the future of these very large freighters, an area Ogiermann is very familiar with having spend a number of years at Cargolux which only operates these very large freighteres, “I think at the moment it’s probably a decent market environment as the fuel prices are very low, but if fuel prices go back up again this will put tremendous pressure on this type of operation.”
Bellies and more bellies
And it’s not just all about large freighters. He’s in agreement that the prevailing pattern of improving cargo volumes but lagging yields. “At the macro level if you look at the deliveries of aircraft worldwide and then the expected growth of air cargo, there’s still at the moment an excess of supply generally in the market that includes now, to a degree, freighters but also the rolling out of efficient and significant widebody capacity.
“With a lot of carriers with modern aircraft being rolled out adds to that capacity base, so overall I think the world market trend in terms of supply and demand is excess cargo capacity so if you’re not really smart in terms of how you deploy capacity then you might be exposed some pressure,” he said.
Certanly Qatar Airways cannot point fingers at any one on this point – with over 200 passenger aircarft on order at the time of writing, including almost 80 A350 widebodies and another 50 B777-9s, a dozen more B787-8s (already operating 18) and other misceleenious orders – the Doha carrier is prime leader in capacity injection into the market. And the A350 is no slouch when it comes to cargo – around 20 tonnes of belly capcity, slightly less than a B777, Ogiermann notes. “There will definitely be strong growth on the belly side, but we also have a lot of freighters on order as well and that certainly is something that will be important for us.”
Key to this is what he says is “very strong communication” with the passenger side of the business. “For every destination we’re running very integrated operation – what’s the best type of operation, is it better to service with what type of aircraft, etc – it’s always the company bottom line that comes first but cargo is always fully integrated with the passenger side.”
Currently the carrier operates a fleet of 147 aircraft, including five A330-200F and seven B777F with orders for three more A330Fs (with eight additional options) and five more B777Fs. With that sort of fleet makeup Qatar Cargo has a 60/40 mix of belly/freighter capacity.
Synergy
But clearly Ogiermann doesn’t lose sleep over this, pointing out the capacity will come on over time and “I would say that we are in a good position because we can combine the network of the passenger aircraft together with the freighters and I think that gives us quite a good competitive edge because we can cross feet from the freighters to the bellies and from the bellies to the freighters”.
In particular, and this goes back to the geogrphical advantage, the freighters form a very good synergy with Qatar’s Doha hub he adds, because the A330Fs can operate to and from neighbouring continents including African destinations and even some European destinations – basically anything with a stage length up to six hours.
“That makes the A330 a good feeder aircraft, so we have a good combination of B777 freighters, A330 freighters and very efficient belly capacity inluding eventually, the A350. So that’s a very, very efficient mix of cargo capacity and I think that gives us a competitive edge,” he said.
Meanwhile,describing the IATAled industry-wide initiative to remove 48 hours from the supply chain, as “a very, very important topic,” Ogiermann is frank about the lack of collectively industry progress that has been made, and that has caused a lot of unhappiness amongst shippers.
“The problem is, it’s not in control of the airlines. We are in a very regulated industry where you need a lot of support from customs authorities, from customs clearance agents and then all the various procedures in terms of security – so it’s not really in the control of the airline.”
“The problem is that we need to find the right approach and industry needs to talk to Customs authorities to work more on pre-clearance of goods and international standards that are electronically applied and that’s under the auspices of IATA for those topics to be pursued. There’s not an individual airline make a difference we have to work with our respective authorities and relevant countries and try to have a better integration of customs systems and airline systems to speed up clearance to comprehend quality that sometimes is delaying shipments.”
Getting the industry off of its paper diet is certainly part of this 48-hour drive, but progress has been slow in some quarters and rapid in others. But as Ogiermann points out Qatar Cargo gave itself a very challenging target from what he says was very low coverage three years ago with a target to have at least 50 per cent of its shipments transported by e-AWB by the end of this year. Currently the carrier stands at 40 per cent coverage.
We’ve given ourselves very challenging targets and we’ve come along way and we’re quite ambitious and we have a good ranking now in terms of e-AWB coverage among all the carriers which is measured by IATA. So for us it’s a very important topic and the new IT system will really help us to roll it out.
