The boom in e-commerce has spread across regions, and in the Middle East, Saudi Arabia has emerged as a key hub for the movement of goods from China to the Arab region, with major infrastructure projects being developed to help facilitate trade.
With a mix of passenger and freighter aircraft, flag carrier Saudia Cargo has been operating this route with increased focus carrying industrial materials, project cargo and consumer goods for both B2B and B2C clients.
Vikram Vohra, Regional Director for Asia Pacific at Saudia Cargo, walks us through the airline’s operations on this route, as it looks to add more capacity on the back of strong demand for air freight.
Can you give us a rundown of the China-Saudi trade lane? What goods has Saudia been moving by plane?
Airfreight between China and KSA is currently witnessing double-digit growth. The nature of products varies from Industrial Materials, project cargo to consumer goods in both B2B & B2C mode.
At Saudia Cargo, we offer a variety of products in our portfolio of services, tailor-made for almost any type of cargo. From face masks and Covid test kits, to commodities such as e-commerce materials and general cargo for industrial purposes, all such products are carried on our freighters and passenger services connecting HKG and China to KSA and beyond.
Lately, we are seeing high demand to KSA in the e-commerce segment, as well as global sporting and media/cultural events, where we provide dedicated lift to support all of these verticals.
What are the new developments that are having a positive impact on your operations on this route?
Saudia Cargo has been agile and quick to react to the market requirements and customers’ needs. In Hong Kong, for example, we supplemented our freighter capacity with five additional pax-freighters per week from Q3, in order to meet growing client demand.
Likewise, in Shanghai and Guangzhou, we have successfully deployed additional freighters and pax-freighters (preighters) at short notice as we felt the need to augment our existing capacity to KSA and beyond. We also opened new stations in our APAC region in Q3, which have all stemmed from client demand.
These incremental operations have had a positive impact on our revenues as well as market share. But more importantly, they have allowed us to become a more dominant player in the global airfreight business.
Is there sufficient capacity to meet the demand for shipments between China and the US? What can you say about competition in the Middle East market?
We have opted not to serve the China-US market directly, as operating this route via KSA does not give us, or other stakeholders, an optimum result.
Competition in the Middle East market has always been prevalent. However, our focus remains on HK and China to KSA where we have invested in upgrading our services in the air and on the ground, and this gives us our leadership position in this prime lane. We will continue to expand this lane, with additional frequencies being added from the SU22 schedule.
How has the company dealt with staff shortages in your cargo operations?
First and foremost, we are proud to state that our company has strictly adhered to all regulatory compliances that were put in place by various authorities globally.
Internally, we set up our own staggered work hours and work-from-home guidelines, and each employee remained connected using various technology platforms. We also re-routed certain operating lanes away from high-risk countries with a view to place crew-safety as our top priority.
With lack of belly-hold capacity, how long do you expect cargo in cabin flights to continue? What is the airline doing to add much needed capacity?
Cargo in cabin flights was an innovative way to substitute the belly-hold cancellations. Saudia Cargo also operated several such flights (we still do), but only in the lower deck.
This mode has played its part in keeping airfreight running through the pandemic, but may not be economically sustainable for the long-term, once passenger services start to recommence globally. There are also safety concerns on loading all types of cargo in the cabin.
Based on your conversations with customers, what stands out as a key improvement that they would like to see?
Our clients have expressed concerns on two major issues. First is the availability of long-term reliable capacity, so that space contracts are honored.
The second concern is related to rates—as there is high fluctuation at short notice, there is uncertainty from shippers on whether they will ship or cancel orders completely. In summary, the clients are seeking an early end to uncertainty, so that long-term plans can once again be defined and executed.
