Since KL came on line at the end of May exports to the UK and Ireland have risen by 57 per cent, nearly ten times more than the six per cent increase in cargo to the rest of Europe and two-thirds more than cargo to North America which grew by 37 per cent.
The products being carried are a good mix heavily weighted towards high tech electronics, brought down by road from Penang in the North of Malaysia. These are half of the goods IAG moves out of Kuala Lumpur, ahead of perishables (30 per cent), rubber goods (10 per cent) and ‘just in time’ garments (five per cent), which Cheetham said is often carried as a prioritised product.
Imports into the Malaysian capital have increased as well. Both the UK and Ireland saw a 40 per cent rise, double those from North American which increased by 20 per cent. Inbound KL, IAG Cargo has seen a good mix of cargo including machinery parts and industrial chemicals, as well as perishables – in particular cherries and blueberries – alongside pharmaceutical products This mix and balance of goods, one cutting out the traditional problem of lack of imports, helped make Kuala Lumpur very attractive for IAG Cargo.
“We feel that KL is a very, very strong destination for air cargo,” Cheetham said. Another part of the attraction is that of a strategic hub for the Southeast Asia region. “We look forward to be using KL in that respect,” added Cheetham.
The background to this is not totally unexpected. Malaysia is one of the booming vibrant economies of the world. Per capita GDP at US$23,900 per annum, with a growing and confident middle class (which might explain the cherries and blueberries), is forecast to grow by six per cent this year.
Malaysia’s exports last year were US$234.14 billion, compared to imports of US$208.86 billion. Some 14.2 per cent of this was with just-across-the-causeway Singapore, but swathes of it was with more distant places like China, Japan and the US who respectively account for 12, 10.8 and 8.4 per cent respectively, of exports, Md Silmi Abd Rahman, director of Matrade’s Transport, Logistics and Machinery section said. Matrade is the government agency tasked with promoting Malaysia’s overseas trade.
Of exports a third are electrical and electronic products with petroleum and LNG products the next two largest categories at 9.2 and 8.4 per cent respectively. This broad range from oil and gas goods to perishables and the volumes involved, allows air cargo to operate, said Cheetham.
“We don’t feel that this country is over-exposed to any particular sector” said Cheetham.
Malaysia needs to trade and it needs air services in order to remain competitive at a time when its own national carrier is going through a period of restructuring, one with light still pretty far down the tunnel.
One problem Malaysia does not have is infrastructure capacity. It has five international airports: Kuala Lumpur, Penang, Senai, Kuching and Kota Kinabalu of which just two – Kuala Lumpur International Airport (KLIA) and Penang – contribute the lions’ share of 97.6 per cent with KLIA moving 84.2 per cent of the country’s total air cargo volume. Luckily it was built to be big.
The benefits of this situation showed up and not just quickly, but before the new service started. That was 27 May with 15 tonnes of capacity on each daily flight, but before that there was a sharp increase in first quarter sales compared to the same period last year.
”Every destination was growing. It gave us confidence” said Cheetham. Leaders by a mile were North America and Africa and the Middle East, which saw increases of 85 and 78 per cent respectively. The rest of the world isn’t doing badly either. Latin America, Latam as it is referred to in the trade, clocked up a first quarter increase of a third.
The laggards were Europe at 13 per cent and the United Kingdom and Ireland on an almost not worth mentioning one per cent.
Wisely IAG is not expecting its business to keep growing at those breakneck rates but it is pleased the gap is now closed. Its looking to close other gaps but my-oh-my are they tightlipped about it.
“We are very keen on further expansion” Cheetham told Payload Asia noting the two-hubbed carrier remains off-line in Indonesia and Vietnam in Southeast Asia and more broadly across Asia, in Taiwan for instance, but declining to say anything more precise about where it would like to expand.
