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Sky high

Emirates SkyCargo is expecting its business to grow, but with fuel prices set to aggravate the perennial problem of falling yields, the company is bracing for a challenging 2017.

After a demanding 2016 for the industry as a whole, Emirates SkyCargo, the cargo division of the UAE-based airline, is not alone in hoping for a better 2017. 


The airline sees plenty of potential for its own business, with growth in store for perishables, pharmaceuticals and major trade lanes across the globe. However, Nabil Sultan, Emirates Divisional Senior Vice President, Cargo, is not optimistic about one factor that has a big impact on yields industry-wide.


“The last year has been a challenging one for the air freight industry. The challenge was not uniquely with cargo tonnages – we witnessed a growth in tonnages in the last quarter of the year which has continued into January 2017. The biggest challenge right through the year and moving into 2017 has been that of falling yields. With fuel costs expected to increase in 2017, this problem is set to aggravate further.”


The issue of yields calls for concerted industry action, Sultan says: “The entire air freight industry and its stakeholders will have to come together to find a way of balancing yields with the increasing fuel costs to ensure that operations – especially those of freighters – remain sustainable.”


Emirates SkyCargo, which operates across Emirates Airline’s fleet of 255 aircraft, including 15 dedicated freighters, will see its fleet expand as more passenger aircraft are added – there are more than 200 awaiting delivery – but does not expect to invest in new dedicated freighters for now. 


Governments and industry players must also work together towards regulations that reduce friction, according to Sultan. “The concept of e-freight is critical in this regard. Digitisation has been evolving at a slow pace and continues to be a major challenge for the air cargo industry. It is necessary that we have a joint effort from all relevant stakeholders including governments to ensure that regulations governing transport of goods facilitate rather than hinder the flow of goods from one location to another.”


Amid this tough context, Emirates SkyCargo has observed and reacted to a trend towards specialised cargo offerings split along different product lines and believes this will continue and develop further in 2017.


“Given that the overall trend in the air cargo industry has been a movement away from just transporting general cargo towards transportation solutions tailored to specific industry business verticals, any development or investment into infrastructure will have to be able to address these specific logistical requirements,” says Sultan. 


The airline is making sure it positions itself to take advantage of demand from one of the most lucrative and fast-growing sectors, the pharma industry, which IATA estimates moves over one trillion dollars worth of cargo every year. The industry body has been taking steps to halt the decline of air cargo’s share of the global transport of pharmaproducts, which it says has declined from 17% in 2000 to 11% in 2013. >>

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