Hactl: The Heartbeat of Hong Kong’s Air Cargo Hub

Operating since 1976, the company’s services extend to over 100 airlines and 1,000 freight forwarders worldwide, making it a vital player in the global air cargo network.
By Mohammed Irshad

 

As we look ahead to 2024 and beyond, there is no change to our long-term policy of investment in innovation, led by our Performance Enhancement team. It is admittedly ever more challenging to find new opportunities to further enhance our operations, but we continue to try. Equally important, our every action and decision are now taken with an eye to sustainability, and this is now enshrined in our culture through our Sustainability Strategy Framework.”

At the heart of Hong Kong’s bustling aviation hub lies Hong Kong AirCargo Terminal Limited (Hactl), a name synonymous with efficiency, innovation, and excellence. Operating since 1976, the company stands as the leading air cargo terminal in Hong Kong, offering the most comprehensive and efficient ground handling services with state-of-the-art facilities.

Born to optimize the restricted cargo space at Hong Kong’s former Kai Tak Airport, Hactl has evolved to support the city’s ambition to become a world-class cargo hub. Over the past decades, the company has meticulously crafted a proud history marked by substantial investment, continuous innovation, rich experience, and a commitment to industry best practices.

Recognized as the world’s largest independent handler at the Hong Kong International Airport – the global pinnacle of air cargo hubs – Hactl sets the gold standard by which the industry measures itself. Handling almost 40% of all air cargo traffic flowing through this international nexus, the company not only creates the framework for cargo management, but also clears the path for air freight to become more intelligent, efficient, and sustainable in the future.

Hactl’s SuperTerminal 1, stands as the world’s single largest multi-level air cargo terminal with a designed capacity of handling up to 3.5 million tons every year. Boasting massive handling systems that represent the epitome of automation and efficiency, SuperTerminal 1 is evidence of Hactl’s commitment to providing state-of-the-art facilities. Accredited under every relevant industry standard, the terminal accommodates every type of cargo and aircraft.

Hactl provides a true one-stop shop, offering comprehensive services such as terminal handling, ramp handling, crew transport, documentation, charter flight support, and value-added logistics services. Hactl’s services extend to over 100 airlines and 1,000 freight forwarders worldwide, making it a vital player in the global air cargo network.

In addition to physical cargo handling, freighter ramp handling, documentation handling, and crew transportation, Hactl provides unique multi-modal service between Hong Kong and mainland China through its wholly-owned subsidiary Hacis.

At the heart of SuperTerminal 1’s operation is COSAC-Plus, the latest generation of Hactl’s air cargo management system. This cutting-edgetechnology seamlessly links forwarders, airlines, and regulatory bodies,providing unparalleled data flows and visibility of cargo status.

At the forefront of development, Hactl adopts cutting-edge technologies, Orchestrating a transformative symphony in the global transportation of goods. From automated guided vehicles gracefully navigating through warehouses to state-of-the-art software optimizing21every step of the logistics chain, Hactl not only envisions but actively engineers a future where air cargo is synonymous with intelligence, velocity, and sustainability. Air Cargo Update had the privilege of engaging in an insightful conversation with Joanna Li, Executive Director – Commercial and Business Development of Hactl. Here is an exclusive glimpse into the visionary perspectives and strategic insights that propel Hactl to the forefront of the air cargo industry.

As we step into the new year, could you provide insights into how 2023 unfold for Hactl? What were the key achievements, challenges, and pivotal moments for the company during the past year?
2023 was a challenging year for the air cargo industry as a whole, impacted by geo-political issues such as Ukraine and Israel, and trade tensions between major economic powers. At Hactl, we have seen steady improvement throughout the second half year, buoyed up by increasing e-commerce activity. We are still expecting 2024 to see a return to modest underlying growth.

How does Hactl’s use of Automated Service Kiosks (ASK) improve air cargo operations, and what’s next in your digitalization journey?
The ASKS are digitizing what was a paper-based, manual process. With large and constant volumes of visitors collecting cargo from Hactl, anything we can do to speed up the process is good for customers and relieves potential congestion on the site. The high-tech features of the ASKs also provide a more robust layer of security since there is no human involvement in scrutinizing and matching documents to the presenting individual. This is a technology that is already used in other government applications. Other processes and services will be added progressively to the kiosks’ capabilities. At this moment, we are also studying various projects involving the use of Al to improve our work processes across the board, and thus efficiency.

How does Hactl’s partnership with Aerovision Technology enhance safety and reliability in Hong Kong’s air cargo industry?
We are looking at all possible means of eliminating the risk of fires from lithium-ion battery shipments. We introduced sniffer dogs in 2023 to detect any possible undeclared shipments, and this new intelligent thermal

system further strengthens our precautions by detecting any suspicious temperature variances that could indicate batteries are overheating inside a built-up ULD and in danger of causing a fire. It is far better to eliminate any potential problem on the ground before cargo is loaded and flies.

Hactl has made a public commitment to the Science-Based Target initiative (SBTI). What specific carbon reduction targets have been set, and how do these align with the goals of the Paris Agreement?
Hactl has committed to reduce absolute scope 1 and 2 GHG (greenhouse gas) emissions by 50.4% by 2030, from a 2018 base line, in line with the 1.5°C trajectory for limiting global temperature rises put forward at the Paris Agreement. The company also commits to reduce absolute scope 3 GHG emissions from purchased goods and services, fuel- and energy-related activities, waste generated in operations, employee commuting and downstream leased assets by 50.4% within the same timeframe. The target boundary includes land-related emissions and removals from bioenergy feedstocks.

The Science Based Targets initiative (SBTI) is a global body enabling companies and financial institutions to set ambitious emissions reduction targets in line with the latest climate science. The SBTi’s goal is for businesses across the world to support the global economy in halving emissions before 2030, and achieving net zero before 2050.

Among the many measures Hactl has employed, or will implement, to achieve its SBTi targets, are replacing internal combustion-powered vehicles and ground support equipment (GSE) with electric versions; procuring Renewable Energy Certificates (RECs); increasing the use ofenergy-efficient lighting and heating, ventilation and air conditioning (HVAC) systems; working with suppliers to reduce Hactl’s upstream emissions, especially from purchased goods and services; implementing digital management systems to eliminate paper use; and devising innovative ways of diverting wood, paper, plastics, and mixed waste from landfill.

Hactl signed an agreement with CLP to purchase Renewable Energy Certificates. How has this partnership influenced the sustainability of your operations, and are there plans to expand the use of renewable energy in the future?
The agreement covers six years commencing in August 2022, and will be equivalent to a total reduction of around 18,000 tonnes of carbon emissions associated with electricity (based on the carbon intensity of the electricity sold by CLP Power in Hong Kong in 2021). Hactl has become the largest purchaser of CLP RECS in the airport community. Each unit of electricity in a REC represents the environmental attributes of electricity that are either generated or purchased by CLP Power from local renewable energy sources, including solar power, wind power, and landfill gas projects.

With its purchase of RECS, Hactl reduces its carbon footprint, demonstrating its continued commitment to renewable energy. We continue to invest in new ways to support our overall aims but, while we wait for further new technology to become available to us, this purchase of CLP RECS provides us with an immediate and highly -effective method of supporting the generation and use of clean energy.

Hactl mentions having a world-class Green Terminal aligned with the United Nations’ Sustainable Development Goals (SDGs). Could you provide specific examples of how this commitment is reflected in your day- to-day operations and overall business strategy?

The 17 UN SDGs are closely reflected in Hactl’s recently introduced Sustainable Strategy Framework, which informs every aspect of the company’s operations and decision-making and sets standards and goals for staff and suppliers. Staff and visitors are constantly reminded of the SDGs, which form the basis of interactive displays and quizzes within Hactl’s office stairwells.

Recent examples of Hactl following the SDGs are its New Life for Old Uniforms initiative, which saw 8000 unused, outdated uniforms converted to useful strong tote bags and cute teddy bears; and its sponsorship of a campaign to achieve workplace recognition of and support for, the challenges of menstruation for female workers. The campaign also includes a series of educational activities to promote menstrual equity in the community.

How is Hactl strategically positioning itself to capitalize on the growing digital global economy within the air cargo industry, and could you outline specific initiatives the company is implementing to strengthen its role in the evolving digital landscape?
We have long felt that digitization of air cargo processes is vital to thefuture efficiency of the industry, and to securing its place in e-commerce supply chains where digital data flows eliminate delays and errors, andprovide the transparency and visibility demanded by end customers.Hactl and its subsidiary Hacis have facilitated digital supply chains by providing integration with partners’ systems, and by systematically eradicating all paper-based processes.

This paid a major dividend during COVID lockdowns, enabling Hactl tocontinue operating with all its office staff working remotely. Among the many examples of digital facilitation are our new ASKS whichelectronically release import cargo and update records without humanintervention; our paperless COSAC-eLoading system which provides digital manifests and aircraft loading instructions that can be updatedand shared in real-time, facilitating late changes to bookings; and our mobile apps which enable collectors of import shipments to pre- register their trucks and receive fast-track services. All data collected by these systems is visible to customers.

How does Hactl strategically enhance supply chain efficiency and address challenges through collaborations in the air cargo industry?
Hactl’s standard service offering is designed to provide its airline customers with competitive, safe, and efficient handling of their flights both through the quality and scope of services. Where additional customization is required, Hactl is always open to discussion and will always accommodate such requests whenever possible. A recent example is the partnership with Qatar Airways on sniffer dogs to detect undeclared lithium batteries in cargo. Initially introduced to address their specific concerns, the service has subsequently been made available to all carriers. Our collaboration with ATL on the thermal detection system mentioned above is also a very recent example of partnerships in the industry driving aviation safety.

A recent example is the partnership with Qatar Airways on sniffer dogs to detect undeclared lithium batteries in cargo. Initially introduced to address their specific concerns, the service has subsequently been made available to all carriers. Our collaboration with ATL on the thermal detection system mentioned above is also a very recent example ofpartnerships in the industry driving aviation safety.

As we look ahead to 2024 and beyond, what strategic priorities and initiatives is Hactl prioritizing to further enhance its position in the air cargo industry?
There is no change to our long-term policy of investment in innovation, led by our Performance Enhancement team, whose job is to seek out inefficiencies and resolve them through tech-led solutions. It is our long-held obsession with optimum performance for our customers that has made a major contribution to the high standing of Hong Kong today, as a global air cargo hub; and we will continue to do everything we can to help the airport maintain its leading role. It is admittedly ever more challenging to find new opportunities to further enhance our operations, but we continue to try. Equally important, our every action and decision are now taken with an eye to sustainability, and this is now enshrined in our culture through our Sustainability Strategy Framework.

Saudia Cargo, WFS and Cainiao Group kick off cooperation in Liege to boost the efficiency of cross-border e-commerce trade

Liege, Belgium: Saudia Cargo, Worldwide Flight Services (WFS), a Member of the SATS Group, and Cainiao Group, have officially launched their strategic collaboration at Cainiao’s Liege eHub in Liege Airport, Belgium, further solidifying their longstanding partnership.

The collaboration is aimed at optimizing logistics processes through operational streamlining and the
adoption of logistics innovations.

An inauguration ceremony was held on 01 March at the airside of the eHub, currently leased by WFS, with logistics procedures, facilities, and innovations invested in by Cainiao, demonstrating a commitment to delivering the best quality service solutions to clients and partners. WFS, in close collaboration with Cainiao, operates within the air cargo station.

Since November 2021, Cainiao and WFS have been working together to enhance operational quality for joint partners like Saudia Cargo. Key service level agreement commitments include a 3-hour e-commerce transit, BUP release within 3 hours from ATA, and truck handling in less than 90 minutes.

The collaboration has also bolstered the logistics capacity of the eHub, with three temperature- controlled facilities jointly designed by the three parties. These include areas for loose 2-8°C
(205 sqm), BUP 2-8°C (140 sqm), and loose 15-25°C (400 sqm), supporting the transportation
of perishable and pharma cargo products.

Additionally, the eHub has obtained BCP certification, enabling the transport of fresh goods and further enhancing its capacity to facilitate cross-border trade.

This initiative addresses the growing demand for high-quality logistics operations in the cross-border e-commerce sector, particularly in the Middle East and European markets. Earlier this year, Cainiao launched its international express shipping service, Global 5-Day Delivery, in collaboration with AliExpress, now available in ten countries worldwide.

The collaboration between Saudia Cargo and Cainiao includes specific freighter flights from Hong Kong to Riyadh and Liege, strategically tailored to meet the increasing logistics demands in these key regions and enhance e-commerce delivery efficiency. Furthermore, the contract extension to WFS for handling over 50,000 tonnes annually on flights connecting Liege and Riyadh underscores Saudia Cargo’s ambition for operational excellence and reliable logistics services.

WFF’s investment in subleasing part of the Cainiao facility in Liege illustrates its commitment to innovation and efficiency, creating a dedicated area for swift and real-time information processing. The integration of innovative technology solutions, including AGVs, advanced PDAs, digital dashboards, and live tracking systems, supports a new generation of cargo management systems utilizing IoT technologies to drive efficient and sustainable e-commerce handling.

Teddy Zebitz, CEO of Saudia Cargo, remarked: “Our collaboration marks a strategic milestone, addressing the burgeoning significance of e-commerce in the air cargo sector. Our aim is clear: to introduce a business model that enhances efficiency, reliability, and innovation on a global scale, reshaping the landscape of international trade. With the Kingdom of Saudi Arabia serving as a pivotal market, our operations into Liege solidify its status as a crucial hub for efficient connections to Europe, while also strengthening our position in the KSA market.”

“Central to this endeavor is our partnership with Cainiao, leveraging their unparalleled capacity and global network. Our meticulous process, from pre-built ULDs in Hong Kong to seamless handover in Liege via Riyadh, ensures an uninterrupted flow of e-commerce materials. In parallel, as we expand our capacity and cargo flights worldwide, the collaboration with WFS/SATS underscores our commitment to innovation and efficiency, revolutionizing e- commerce handling with cutting-edge technologies,” he added.

John Batten, Chief Executive Officer, Europe, Middle East, Africa and Asia (EMEAA) WFS, a Member of the SATS Group, also commented: “WFS is proud to be extending our partnership with Cainiao and Saudia Cargo. As highly-respected leaders in their respective fields, they recognize that key aspects of e-
commerce and cargo handling supply chains are most efficient when they are delivered by experienced and trusted partners. By combining WFS’ proven handling capabilities with the use of innovative technologies, our team in Liege look forward to delivering the clearly-defined service standards set by Cainiao and Saudia, and to supporting the continued growth of our successful collaboration.”

Eric Xu, Vice President of Cainiao Group, noted: “Cainiao is committed to transforming the logistics industry through continuous innovation to enable a seamless e-commerce experience and we are delighted to find close partners like Saudi Cargo and WFS on this path. Through continuously equipping our Liege eHub with cutting-edge technology solutions and facilities, we managed to boost the efficiency of logistics operations while improving customer experience through greater transparency and traceability. We are confident that this win-win collaboration will further reinforce Cainiao’s position as the world’s leading cross-border e-commerce logistics provider by offering the valued customers of us three companies with enhanced experience.”

Challenge Group: Navigating the volatile global business landscape with ease

The Group extends its influence beyond the runway, guaranteeing efficient door-to-door delivery solutions. Working together with more than 40 reliable trucking partners, it offers tailored road feeder solutions to more than 100 destinations across Europe which
can be reached within 12 hours.

By Mohammed Irshad

The air cargo industry isn’t just about navigating turbulence: It’s about taking flight, reaching new heights, and delivering value at every step. In this high-stakes game, where agility and resilience are crucial, Challenge Group emerges as a steadfast player, expertly navigating the choppy waters.

From its humble inception in 1976, Challenge Group has metamorphosed into an influential entity, comprising eight cohesive divisions that breathe life into their guiding principle: “Let your logistics project be our challenge!”

But what distinguishes Challenge Group as a true game-changer in the air cargo arena? The answer lies in their holistic approach. Unlike standalone service providers, Challenge Group operates as a seamlessly integrated network, presenting an unparalleled spectrum of services under one roof. This encompasses:

Dedicated Airlines: Three strategically positioned airlines—Challenge Airlines IL, BE, and MT—enable global reach and flexible scheduling, ensuring swift and secure delivery to your cargo’s destination.

Extensive Road Network: With robust European and US trucking networks, Challenge Group extends its influence beyond the runway, guaranteeing efficient door-to-door delivery solutions. Working together with over 40 reliable trucking partners, Challenge Logistics offers tailored road feeder solutions to more than 100 destinations across Europe. It currently averages more than 1,250 legs per month. Most of the major European capitals can be reached within 12 hours. 65% of Challenge Group’s business is non-standard cargo, hence door-to-door solutions for complex cargo are its specialty.

Expert Challenge Handling: Their established handling company ensures meticulous cargo care, minimizing risks and optimizing efficiency throughout the ground handling process. Located in Liège, Belgium, at the heart of the Golden Triangle (Frankfurt-Paris-Amsterdam), Challenge Handling is considered one of the largest and most sophisticated handling facilities in Europe.

Some 40,000 m² of online warehouse, 10,000 m² of offline warehouse, and 400 m² of temperature-controlled storage, as well as 5000 m² of office space, make up the facility which caters specifically to special cargo needs. Alongside automated roller-bed systems for ULD (SACO & ETV systems) to ensure quick and efficient cargo handling, Challenge Handling has a high-security clearance and has Europe’s largest capacity high loader (52 tons).

Leasing Powerhouse: Challenge Aviation, catering to both airlines and operators, provides access to wide-body aircraft and engines through its leasing arm.

Tailored Maintenance: Whether routine checks or intricate repairs, their line maintenance provider ensures your aircraft remains airworthy and prepared for the next challenge.

Commercial Expertise: Through Challenge Air Cargo, the group’s commercial entity, clients gain access to dedicated teams adept at crafting unique solutions for time-sensitive and complex shipments.

This integrated approach empowers Challenge Group to overcome any logistical hurdle, no matter how complex or demanding. They don’t merely transport cargo; they conduct a symphony of seamless transportation, consistently surpassing expectations.

Air Cargo Update had the privilege to sit down with Yossi Shoukroun, the CEO of Challenge Group, gaining further insights into the company’s accomplishments and plans. Let’s discover more from his own words in this Q&A.

Can you elaborate on the specific records and areas of growth that Challenge Group achieved in 2023?
In 2023, Challenge Group achieved remarkable milestones and experienced substantial growth in the face of challenging market conditions. Despite these obstacles, the company celebrated a successful year highlighted by notable accomplishments.

The introduction and deployment of our B767 fleet were pivotal in this success, allowing us to uplift a record-breaking tonnage. Additionally, our end-to-end and charter activities reached new heights, culminating in the completion of 1000 charter flights throughout the year.

Both Challenge Handling and Challenge Technic made significant strides by attracting new clients such as MSC, SF, and Smartwings. This not only expanded our customer base but also enabled us to diversify and enhance our range of logistics services, showcasing our commitment to providing comprehensive and tailored solutions to meet the evolving needs of our clients.

What key strategies or innovations contributed to Challenge Group’s success in 2023?

Our core identity and value proposition are deeply rooted in an end-to-end solution approach tailored to meet diverse supply chain requirements. Over time, we’ve emerged as the partner of choice for handling complex verticals such as heavy and oversized, dangerous goods, aircraft engines, cars, horses, and pharmaceuticals and addressing specific or unique logistics needs.

Looking ahead to 2024, our strategic emphasis is centered on reinforcing internal collaboration within the group and refining the distinct service that distinguishes us within the air cargo industry. Those ancillary services are none other than providing end-to-end logistics solutions from a singular source, ensuring stability and reliability throughout the entire supply chain.

In terms of operational efficiency, can you share any specific initiatives that played a significant role in the company’s achievements?

Challenge Group has implemented several key initiatives that have played a significant role in our achievements. One noteworthy initiative is the establishment of fast lanes within our infrastructures in Liege, streamlining the movement of goods and reducing processing times.

In addition to that, the implementation of a second-line warehouse optimizes the sorting and distribution process and offers our customers an additional storage area dedicated to specific operations such as the staging equipment build-up process. Furthermore, special equipment tailored to our unique requirements has enhanced our overall efficiency in handling various types of complex heavy and oversized shipments.

In the realm of digital tools, we have successfully integrated cutting-edge software solutions. This includes the incorporation of 3D software for special loading requirements ensuring meticulous handling of unique shipments and enabling us to give a quick response to customers’ queries, and specialized software to calculate the most efficient routes, not only minimizing transit times but also contributing to fuel efficiency.

With 2023 being a year of growth, how did Challenge Group expand its market share, and in which regions or sectors was this most notable?

Two-thirds of the Group’s business is concentrated in diverse verticals including live animals, automotive, aerospace, artworks, temperature-controlled shipments, valuables, and dangerous goods. In these verticals, Challenge Group stands as a recognized and trusted business partner. Anticipating the growth trajectory of the complex vertical segment, we are confident that our certified expertise and established capabilities will continue to secure additional market share.

While we foresee growth across various verticals, the most significant surge is anticipated in the e-commerce sector. This dynamic market presents an exceptional opportunity for expansion, and we are strategically positioned to capitalize on this trend.

Are there any technological advancements or industry shifts that influenced the company’s approach in 2023, and how is this expected to continue in 2024?

Challenge Group will continue to navigate external industry challenges amid global geopolitical uncertainty and economic volatility. Internally, Challenge Group is proactively addressing these challenges through a strategic fleet expansion, paving the way for the incorporation of new markets and destinations custom-tailored to meet customer requirements. Additionally, we have plans in place for a new digital sales channel and sustainability initiatives, both designed to bolster and elevate the overall customer experience.

Are there any plans for expanding the fleet or enhancing workforce capabilities in the near future?

Challenge Group is currently undertaking a strategic fleet expansion initiative, a pivotal move that will, in turn, facilitate the inclusion of new markets and destinations specifically tailored to meet the diverse requirements of our valued customers. In recent years, Challenge Group has diversified its fleet with the addition of a B767-300BDSF aircraft in August 2023, the continuation of the conversion program with two aircraft undergoing simultaneous conversion, and the full fleet of four B767 aircraft expected to be fully operational by Q3/2024.

Given the growing emphasis on sustainability, what initiatives is the Challenge Group undertaking to minimize its environmental footprint?

In alignment with our core values and dedication to sustainability, Challenge Group is actively implementing initiatives designed to support and enhance the overall customer experience. A key aspect of this strategy involves the introduction of eco-friendly practices in our operations in Liege, such as the integration of electric cars and equipment on the ramp both for Challenge handling and Challenge Technic contributing to a reduction in carbon emissions associated with ground operations, investing in electrical tractors for ground operations, and incorporating the use of Ground Power Units (GPU).

How does the company balance economic growth with environmentally conscious practices in the aviation logistics sector?

Challenge Group recognizes the imperative of harmonizing economic growth with environmental responsibility in the aviation logistics sector. We are dedicated to achieving sustainable growth that benefits our stakeholders, the industry, and the planet we share.

Are there plans to diversify revenue streams beyond the current service offerings, and if so, which areas are being explored?

Currently, our primary focus is on consolidating our offer and refining our value proposition within the airfreight and logistics industry. However, we remain ready to proactively tackle new challenges that may arise, always seeking opportunities that can bring mutual benefits to our business partners.

Can you elaborate on Challenge Group’s international presence and how it manages relationships with stakeholders in different countries?

Challenge Group boasts a robust network that spans key regions globally. Our international presence is strategically designed to cater to diverse markets and meet the evolving needs of our clients worldwide. Managing relationships with stakeholders in different countries is a cornerstone of our success. We approach this with a tailored strategy that recognizes and respects the unique cultural and business environment of each region.

Could you provide insights into the company’s plans for expansion, new service offerings, or potential

strategic partnerships in 2024?

In 2024, we are set to embark on a series of strategic initiatives to bolster our operations. A new hangar and a state-of-the-art maintenance station are in the pipeline for Challenge Technic, underscoring our commitment to expanding and enhancing our aviation services.

The imminent opening of additional destinations is a direct result of the recent expansion of Challenge Group’s fleet. This growth not only amplifies our reach but also signifies our dedication to proviading diverse and extensive options for our customers.

Moreover, Challenge Logistics is spearheading advancements in our technological infrastructure with a substantial investment in cutting-edge solutions like the Project44 tool. This innovative technology is poised to revolutionize our operations, offering seamless visibility and unparalleled transparency to our valued customers.

These comprehensive plans for 2024 reflect our unwavering dedication to growth, technological excellence, efficiency and sustainability, ensuring that Challenge continues to set industry benchmarks and provide top-notch services to our discerning customers.

Air cargo demand surges 10.8% in December, closes 2023 near 2022 levels

Geneva, Switzerland: Global demand for air cargo surged by 10.8 percent in December, the strongest annual growth performance over the past two years, thus, pulling the industry’s 2023 closure to near 2022 levels, the International Air Transport Association reported.

IATA also noted a particularly strong fourth-quarter performance for air cargo despite economic uncertainties. Full-year demand reached a level just slightly below 2022 and 2019.

Global full-year demand in 2023, measured in cargo tonne-kilometers (CTKs), was down 1.9% compared to 2022 (-2.2% for international operations). Compared to 2019, it was down 3.6% (-3.8 for international operations).

Capacity in 2023, measured in available cargo tonne-kilometers (ACTKs), was 11.3% above 2022 (+9.6% for international operations). Compared to 2019 (pre-COVID) levels, capacity was up 2.5% (0.0% for international operations).

December 2023 saw an exceptionally strong performance: global demand was 10.8% above 2022 levels (+11.5% for international operations). This was the strongest annual growth performance over the past two years. Global capacity was 13.6% above 2022 levels (+14.1% for international operations).

Some indicators to note include:

“Despite political and economic challenges, 2023 saw air cargo markets regain ground lost in 2022 after the extraordinary COVID peak in 2021. Although full year demand was shy of pre-COVID levels by 3.6%, the significant strengthening in the last quarter is a sign that markets are stabilizing towards more normal demand patterns. That puts the industry on very solid ground for success in 2024. But with continued, and in some cases intensifying, instability in geopolitics and economic forces, little should be taken for granted in the months ahead,” said Willie Walsh, IATA’s Director General.

2023 Regional Performance

Asia-Pacific airlines posted a 0.9% increase in demand in 2023 compared to 2022 (-1.4% for international operations) and a capacity increase of 28.5% (+16.6% for international operations). In December, airlines in the region recorded the best performance of all regions, posting an 18.5% increase in demand (+15.4% for international operations) compared to 2022. Capacity increased 31.1% (+22.9% for international operations) during the same period.

North American carriers reported the worst year-on-year performance of all regions, with a 5.7% decrease in demand in 2023 compared to 2022 (-4.3% for international operations) and a capacity increase of 0.3% (+2.7% for international operations). In December airlines in the region reported a 2.0% decrease in demand (+5.9% international operations), compared to 2022. Capacity increased 2.4% (+8.5% for international operations) during the same period.

European carriers posted a 3.9% decrease in demand in 2023 compared to 2022 (-4.1% for international operations). During the same period, airlines posted a capacity increase of 4.5% for both global and international operations. In December, airlines in the region posted an 8.6% increase in demand (+8.7% for international operations) compared to 2022. Capacity increased 7.4% (+7.5% for international operations) during the same period. Airlines in the region continued to be most affected by the war in Ukraine.

Middle Eastern carriers reported an increase in demand of 1.6% for global and international demand in 2023 compared to 2022 and an increase in capacity of 13.5% (+13.6% for international operations). In December airlines in the region posted an 18.3% increase in demand for both global and international operations compared to 2022. Capacity increased 17.7% (+17.8% for international operations) during the same period.

Latin American carriers posted the strongest year-on-year performance of all regions, with a 2.0% increase in demand in 2023 compared to 2022 (+1.9% for international operations). During the same period, airlines posted a capacity increase of 13.2% (+16.9% for international operations). In December airlines in the region posted growth in demand of 6.4% (+6.3% for international operations) compared to 2021. Capacity grew 3.5% (+4.2% for international operations) during the same period.

African airlines reported a decrease in demand of 1.8% (-2.0% for international demand) in 2023 compared to 2022 and an increase in capacity of 5.6% (+5.0% for international operations). In December airlines in the region posted the weakest performance of all with a 1.2% decrease in demand (-1.4% for international operations) compared to 2021. Capacity grew 7.4% (+6.8% for international operations) during the same period.

Red Sea Disruption

In November and December air cargo experienced a modest rise in demand and yields due to disruptions in the Red Sea*. The following was observed when comparing data for the week commencing 4 November 2023 and the week ending 9 December 2023:

Data for the last half of December showed a normalization of demand and yields.

“The recent disruption to maritime routes in the Red Sea has seen some shippers pivot to air cargo. The increased demand saw a spike in air cargo yields on related trade lanes. A similar spike is expected in January as disruptions intensified. While not all cargo is suitable for air transport, it is a vital option for some of the most urgent shipments in extraordinary circumstances. And that is critical to the continuity of the global economy, said Walsh.

Fueling a Greener Future: DB Schenker Ignites Sustainable Transformation in Air Cargo

As the pandemic’s grip on the world tightened, the aviation industry found itself in a freefall. Passenger flights were gone, the air cargo industry’s belly-hold capacity vanished, and traditional models crumbled.

In this maelstrom, DB Schenker, a global leader in logistics solutions which is part of the German Deutsche Bahn Group, defied the odds with a boldness that not only ensured its survival but also propelled it to new heights.

From the ashes of the crisis, DB Schenker’s adaptability rose like a light. In a mere year, it went from scrambling to fill capacity gaps to operating its own global freighter network, a fleet of iron wings stretching across continents with nearly 60 weekly flights.

This wasn’t just reactive improvisation; it was a masterclass in calculated risks, strategic alliances with key airlines, and a laser focus on efficiency. While others clung to outdated models, DB Schenker embraced the new normal, forging a future where resilience and agility became the cornerstones of success.

In an exclusive interview with Air Cargo Update, Bjorn Eckbauer, Senior Vice President of Global Operations and Procurement, Air Global Freight, demystifies DB Schenker’s sustained investment to air cargo. He reveals the strategic levers and transformative actions propelling DB Schenker towards a greener horizon, redefining what’s possible in sustainable air cargo.

Freighter Network Evolution

DB Schenker’s swift response to the initial challenges posed by the pandemic, where the depletion of belly-hold capacity and passenger flights prompted the establishment of its own freighter network. From one year initially intended, the program evolved into a global operation with nearly 60 flights per week, connecting major hubs in the Northern and Southern Hemispheres.

“We embarked on long-term charter contracts to meet the evolving demands,” Eckbauer reveals, highlighting the adaptability that became the hallmark of their operations.

“In those initial stages, the challenges were monumental. The absence of flights meant a depletion of lower deck capacity and passenger flights, which were traditionally relied upon. We had to establish our own freighter network swiftly, departing from conventional ACMI arrangements,” explains Eckbauer.

This initiative, initially designed for a one-year duration, surpassed expectations as the pandemic persisted. “Ultimately, our operations expanded to nearly 60 flights per week on a global scale. Primarily concentrated in the Northern Hemisphere connecting the US, Europe, and China, we also established connections into the Southern Hemisphere,” he shares, revealing the extensive scope of their adaptive measures.

Adapting to a New Normal

The narrative unfolds as DB Schenker recounts the transformative experiences and key learnings from the pandemic. The logistics giant shares insights into its shift away from traditional models, emphasizing adaptability and a strategic focus on a limited number of carriers during challenging times.

“The unexpected resurgence of the market prompted another reconsideration of our strategy,” Eckbauer remarks, illustrating the dynamic decision-making necessitated by the rapidly changing industry landscape.

Shedding light on the significant shifts in their operational approach, Eckbauer explains, “Historically, we operated with a vast array of carriers for both main and lower deck capacities. However, the disappearance of this model due to the profound impact of the pandemic necessitated a comprehensive reevaluation.”

“Our approach involved relying on capacity agreements with various airlines, sometimes accounting for up to 80% of capacity, particularly on passenger airlines. With the disappearance of this model due to the profound impact of the pandemic, a comprehensive reevaluation was imperative,” Eckbauer emphasizes, underscoring the necessity for strategic reassessment.

Market Dynamics and Revenue Strategies

Eckbauer addresses the complexities of fluctuating market rates, the challenges of predicting market recovery, and DB Schenker’s strategies to maintain relationships with carriers amidst a shrinking market.

“Despite the overall market shrinkage of 11 to 13 percent from 2022 to 2023, we maintained relationships with carriers,” he explains, shedding light on the resilience and strategic partnerships that sustain the company’s operations.

“The emphasis on working closely with a more restricted set of partners aimed at fostering strength and resilience in our operations within the evolving market conditions,” he adds.

Providing insight into the strategic rationale behind their approach while offering a detailed analysis of the nuanced market dynamics, Eckbauer continued, “It’s essential to consider the substantial disparity in rate levels between 22 and 23, as the latter is significantly lower. The comparison becomes challenging due to the marked differences in markets between 21, 22, and 23, all of which operate in shrinking markets with declining rates.”

“In analyzing the revenue for this year, it’s essential to consider the substantial disparity in rate levels between 22 and 23, as the latter is significantly lower. The comparison becomes challenging due to the marked differences in markets between 21, 22, and 23, all of which operate in shrinking markets with declining rates. In the current scenario, carriers are less focused on revenue and instead prioritize assessing tonnage. The primary concern is whether they experience growth in tonnage by collaborating with us or not,” he added.

Eckbauer further elaborates, “There’s a slight uptick in the market in terms of rates, albeit not constituting a genuine peak season. However, making a direct comparison proves challenging due to the unique circumstances. We transitioned from exceptionally high rates during the peak of the COVID-19 pandemic, which experienced a drastic decline last year in September and continued to drop significantly into 2023.”

“Anticipating the trajectory, we’ll maintain the current level until mid-December, encompassing this modest peak season or whatever designation we assign to it. Beyond that point, January poses a significant question mark, challenging to predict accurately,” Eckbauer estimates.

Eckbauer offers a comprehensive overview of the industry’s future trajectory, emphasizing, “Over the past three years, our predictions have yielded varying degrees of success across different markets. Examining the global economy, it appears doubtful that a resurgence will occur before the summer of the following year. No discernible signs indicate a swift recovery—automotive sectors are experiencing a downturn, and major high-tech entities report diminished volumes. Post-Chinese New Year, a rapid ramp-up toward a normal market doesn’t seem imminent; rather, it appears that such a transition will require a considerable amount of time.”

Green Logistics and Sustainable Practices

DB Schenker’s unwavering commitment to green logistics takes center stage in their significant efforts. Three years ago, the company pioneered this initiative with a groundbreaking collaboration with Lufthansa, introducing an exclusive flight operating between Frankfurt and PVG.

According to Eckbauer, “Our commitment to green logistics is a significant focus of our efforts. What sets this venture apart is the utilization of sustainable aviation fuel (SAF) equivalent to the full consumption of the aircraft. In fact, we exceeded a 100% offset, going above and beyond in our efforts. To minimize emissions, we integrated this eco-friendly fuel into the Frankfurt fuel network. Although direct burning of this fuel by the aircraft is technically unfeasible, our approach effectively eliminated, to the greatest extent possible, the emissions associated with that particular flight.”

This proactive measure showcases their commitment to offsetting carbon emissions and contributing to a sustainable future.

Customer Engagement Dynamics

Eckbauer discusses the dynamics of customer engagement in the journey toward sustainability. “It’s a mixed scenario,” he noted. “The majority of our clients have set clear carbon-neutral goals by either 2030 or 2035. While a significant number are actively investing in sustainable aviation fuel (SAF) and are willing to bear the associated costs, there remains a sizable portion that hesitates due to the considerable expense involved.”

Considering various factors such as routing, the additional cost typically ranges from EUR 150 to 160 per kilo—a substantial amount, especially for the cargo in question. In some instances, this cost even exceeds current rates for air freight. Despite these challenges, ongoing dialogue and a growing awareness of sustainable practices are marking positive developments.

Eckbauer notes, “We are witnessing a gradual shift with more clients, including smaller ones (clients with lower monthly volumes), expressing interest and making inquiries about incorporating SAF into their shipments. Since our initial venture, we’ve expanded our capabilities, and now, within our global network, every client has the option to offset CO2 emissions by choosing SAF for their shipments, marking a step forward in our sustainability efforts.”

Operational Sustainability Initiatives

Beyond championing Sustainable Aviation Fuel (SAF), DB Schenker actively explores diverse initiatives for environmental sustainability. The company is on the forefront of researching alternatives to foil in ULD (Unit Load Device) construction, aiming to minimize the ecological footprint. As stated by Eckbauer, “Our ongoing tests with eco-friendly alternatives underscore our commitment to creating positive environmental impacts. Simultaneously, we’re in the process of phasing out traditional wooden bars in ULDs, opting for sustainable cardboard alternatives.”

This commitment isn’t confined to internal changes. Collaborative endeavors with airlines identify key areas for supply chain improvements. DB Schenker also extends its sustainability pledge to trucking companies, urging them to adopt environmentally friendly practices. Initiatives like harnessing solar power on warehouse roofs and transitioning to LED bulbs showcase the dedication.

Recognizing that sustainability necessitates collective efforts, DB Schenker and Eckbauer actively pursue diverse avenues beyond SAF.

“While SAF remains pivotal, our multi-pronged approach ensures ongoing enhancements to environmental practices, contributing to a greener future,” Eckbauer emphasizes.

Strategic Vision and Industry Advice

When contemplating DB Schenker’s journey toward carbon neutrality, specific goals become pivotal. As outlined by Eckbauer, “Having clear objectives is paramount in our sustainability journey. While comprehensive change takes time, we’re making significant strides across various domains. In land freight, especially for inner-city logistics, the integration of electric vehicles is increasingly becoming a norm to mitigate our environmental impact. We adopt electric vehicle technology wherever feasible, even though its application in long-term line hauls is still evolving.”

In addition to transforming the land freight landscape, DB Schenker addresses environmental concerns within its operations. Eckbauer explains, “We’re actively phasing out traditional diesel or gas-run forklifts, replacing them with electric alternatives. These strategic shifts align with our commitment to minimizing the carbon footprint and embracing sustainable practices. Our approach is systematic, recognizing that progress is achieved through targeted initiatives across various facets of our operations.”

In anticipating forthcoming challenges in the air cargo industry, DB Schenker employs key strategies for the next six months. Eckbauer’s perspective urges the industry to break free from stagnation, stating, “We’ve remained unchanged for far too long, lagging in adopting common standards. The air freight community must foster improvement and catch up with evolving standards in other industries that have rapidly embraced change over the last decade.”

Expanding Horizons

Apart from DB Schenker’s strategic expansion into promising regions like Saudi Arabia, the company also places a significant emphasis on strengthening its presence in Ethiopia in the African continent.

Eckbauer acknowledges, “While a recent deal in Ethiopia eluded us, we remain actively engaged in these markets. The developments in Saudi Arabia, especially, are noteworthy, poised to become a hub akin to Dubai in the next five years due to its ambitious plans and rapidly growing economy.”

In regards to partnerships, Eckbauer confirmed its established setup in Saudi Arabia. Notably, recent regulatory changes allowing consolidated shipments instead of limiting arrangements to back-to-back present new opportunities.

“This regulatory shift, though promising, requires some fine-tuning. Ongoing efforts aim to navigate and optimize these changes, as they allow for deconsolidation within Saudi Arabia. We remain optimistic about leveraging these new possibilities for our operations in the region,” Eckbauer concludes, encapsulating the forward-looking perspective that defines DB Schenker’s approach to expanding its global footprint.

The experience of DB Schenker in air cargo is proof of its tenacity, flexibility, and perseverance to a more environmentally friendly future. Not only has it survived the storms, but it has come out stronger, changing the whole meaning of success in a changed environment. This story of creativity, smart alliances, and sustainability speaks not just of the here and now, but also of DB Schenker’s long-lasting history of raising the bar.

Qatar Airways Group CEO elected member of the IATA Board of Governors and Arab Air Carriers Organization

DOHA, Qatar— Qatar Airways Group Chief Executive Officer Engr. Badr Mohammed Al-Meer was recently elected to the International Air Transport Association’s Board of Governors and a Member of the Executive Committee of the Arab Air Carriers Organization (AACO).

Representing some 320 airlines or 83% of total air traffic, IATA’s mission is to represent, lead, and serve the airline industry where it advocates for the interests of airlines across the globe.

AACO, on the other hand, is the regional association of the Arab Airlines representing 34 carriers with a mission to promote cooperation amongst its members in many areas such as aero-political affairs, environmental sustainability and training through its regional training centre.

With a strong aviation background, Engr. Badr Al-Meer will be able to support the associations in shaping the future growth of safe, secure, and sustainable air transport, working with members to connect and enrich our world through air travel.

Engr. Badr Al-Meer became GCEO of Qatar Airways on 5 November 2023 following more than 10 years as the Chief Operating Officer of Hamad International Airport.

From 2018 to 2020, Engr. Badr Al-Meer was a Board Director of the Airports Council International in the Asia/Pacific Region, where his expertise contributed to Future Airport Development and Airport Sustainability.

His leadership was pivotal in Hamad International Airport receiving several industry accolades including Skytrax’s ‘Best Airport in the World’ in 2021 and 2022, a testament to the capability and dedication of the entire organization.

Engr. Badr Al-Meer has built an outstanding track record in construction, and large-scale project development. In his new role as Group CEO, Engr. Badr Al-Meer’s experience in delivering successful outcomes in aviation and project management positions him uniquely to lead Qatar Airways Group’s exciting new era that will see innovation cultivate a unified and motivated workforce.

Turkish Airlines expands fleet with massive additional order of 220 Airbus planes

Toulouse, France–Türkiye’s national carrier, Turkish Airlines, is expanding its fleet with an additional order of 220 Airbus’ best-selling A321 and the widebody aircraft A350, bringing to 504 its total order for Airbus planes.

The airline ordered 150 A321 and 70 A350 aircraft — (50 A350-900s, 15 A350-1000s and 5 A350F freighters). This follows two orders from the airline for 10 A350-900s in September and four A350-900s in July 2023. Of Turkish Airlines’ total orderbook for Airbus aircraft, 212 have already been delivered.

Turkish Airlines Chairman of the Board and the Executive Committee Prof. Dr. Ahmet Bolat, commented: “This landmark order is more than an expansion; it’s a testament to our dedication to innovation, operational excellence, and a sustainable future. The addition of these advanced Airbus aircraft to our fleet will not only enhance our operational capabilities but also significantly contribute to our environmental goals. This investment is a crucial milestone in the further evolution of Türkiye’s aviation industry. By modernizing our fleet with more efficient and environmentally friendly aircraft, we are reinforcing our leading position in global aviation and contributing to the nation’s prominence as an aviation hub.”

Christian Scherer, Airbus Chief Commercial Officer and Head of International, Turkish Airlines aims to use its new fleet to shape its future and sustainable expansion as the plane models are known for their efficiency, with more range, less fuel, nose and emissions and best cabin in class.

“The opening into the A350-1000 and the A350F highlights the cross-model value of the A350 family and reinforces our long-lasting partnership with Turkish Airlines and Türkiye’s aviation sector. We are proud to accompany Türkiye’s connection to the world with our state-of-the-art aircraft,” said Scherer.

The A321neo is the largest aircraft in Airbus’ A320neo Family, offering unparalleled range and performance. By incorporating new generation engines and Sharklets, the A321neo brings a 50% noise reduction and more than 20% fuel savings and CO₂ reduction compared to previous generation single-aisle aircraft. Having the widest single-aisle cabin in the sky, the aircraft is the perfect contender for maximizing comfort.

Turkish Airlines welcomes over 77 mn passengers from January to November 2023
Meanwhile, in Istanbul, Turkish Airlines announced it handled over 6 million passengers in November bringing to 77.3 million its passenger traffic from January to November 2023. The figure represents an increase of 16.6 percent compared to the same period in 2022.

Its load factor has increased to 80.4 percent for the period locally and 79.9 percent internationally. In November, the airline’s cargo and mail went from 138.3 thousand tons to 153.5 thousand tons, equating to an increase of 11 percent.

“We’re delighted to see a steady increase in our traffic figures year on year. These numbers are a testament to the hard work our team at Turkish Airlines has been putting in behind the scenes to
ensure all operations run smoothly and keep improving. We look forward to continuously enhancing customers’ experiences with Turkish Airlines, being a leading airline of choice for millions of passengers around the world,” said Prof. Dr. Ahmet Bolat.

By the end of November 2023, Turkish Airlines’ fleet totaled 437. The airline flies to 345 destinations in 192 countries apart from serving 53 destinations across Türkiye.

Kales Group: Carving a niche legacy in the GSSA industry

Representing more than 70 airlines and collectively moving over 200,000 tons of cargo and handling over 100,000 passenger tickets per annum, Kales is further expanding its global reach.

“For us, the emphasis goes beyond mere cost reduction. It’s about solving the entire cargo puzzle. Our entrepreneurial spirit and agility are what truly set us apart in the industry. Our lean structure fosters direct communication, enabling us
to live and breathe air cargo. ‘No’ is not in our dictionary.”
– Kales Group CEO Sebastiaan Scholte

With a legacy spanning over two decades, Kales Group—an independent entity boasting over 185 local employees and a growing network of 39 companies—stands as a formidable force in the aviation industry, serving as a General Sales and Services Agent (GSSA).
Since its establishment in 1994, the company has charted a path of success, intricately looking after the entire order-to-cash process and prioritizing the growth of its partner airlines.
Representing a dynamic consortium of over 70 airlines in cargo-passenger and charter services, Kales Group, which is based at Schiphol Airport, Europe’s third-largest cargo hub, operates seamlessly through a vast network of 58 offices spread across 30 countries. This expansive reach not only showcases the company’s global footprint but underscores its passion for flexibility, personalized service, and steadfast support.
Remarkably, Kales handled nearly 200,000 tons of cargo last year, surpassing pre-COVID levels and achieving market share growth. This accomplishment is not solely attributable to market expansion but reflects Kales’ success in gaining a larger slice of the market.
As a GSSA, Kales Group distinguishes itself by emphasizing a holistic approach that goes beyond cost reduction. The company’s strategy revolves around optimizing profitability and quality, aiming to provide airlines with a higher yield, generating more revenues at a lower cost while maintaining high-quality services.
A significant benefit for airlines partnering with Kales is the elimination of fixed costs. By avoiding the need for offices, staff, and investments in infrastructure, airlines can maximize profits in good times and maintain financial flexibility in challenging periods. This absence of operational costs provides airlines with a key advantage, allowing them to externalize their costs, making them variable and enhancing overall flexibility.

Revenue Breakdown: Cargo Takes the Lead
In terms of revenue breakdown between passenger and cargo services, Kales Group emerges as a predominantly cargo-driven GSSA. Cargo constitutes over 90% of the company’s total revenues, underscoring its prowess in the air cargo domain.
While passenger services faced challenges during the COVID pandemic, with a significant drop in air travel, there’s now a notable rebound in passenger volumes. An intriguing aspect is the 10% increase in general load factors for passengers compared to pre-pandemic levels, leading to higher ticket pricing and indicating a positive trend. Despite this, Kales Group maintains its primary focus on tonnage in its pursuit of excellence in the air cargo industry.

Diverse Cargo Portfolio: From Machinery to Perishables
An influential factor in Kales’ operations is the rapid growth of e-commerce, particularly in its relationship with China. Notably, the cargo flows from China to Europe, and Kales maximizes the available capacity on return flights from Europe to China. While not directly selling e-commerce services, the company strategically leverages the capacity generated by e-commerce shipments, commercializing it for general cargo purposes.
Kales manages a diverse cargo portfolio, spanning a wide array of goods. From machinery to luxury items, and even perishables, the company caters to a spectrum of cargo needs. While perishable items constitute a smaller portion, Kales handles them with precision, including a substantial volume of fish shipments.
In a candid conversation with Air Cargo Update, Kales Group CEO Sebastiaan Scholte reveals core strategies that distinguish the GSSA in the competitive air cargo industry.

Operational Excellence Beyond Cost Reduction
“For us, the emphasis goes beyond mere cost reduction; it’s about solving the entire cargo puzzle,” says Scholte. He articulates a strategy focused on optimizing profitability and quality, positioning the company as a partner dedicated to providing airlines with a higher yield. “Our entrepreneurial spirit and agility are what truly set us apart in the industry,” he adds, emphasizing their unique operational structure.
Operating through 58 offices in 30 countries, each managed by directors treating them as their own businesses, Kales differentiates itself from larger, bureaucratic organizations. “Our lean structure fosters direct communication, enabling us to live and breathe air cargo. ‘No’ is not in our dictionary,” Scholte proudly states. Kales prides itself on 24/7 availability, agility, and quick responses, embodying a culture where ‘no’ is not in their dictionary.

AI’s Transformative Potential in Air Cargo
“In our vision, AI holds significant potential, particularly for e-commerce companies dealing with return shipments,” states Scholte. AI can proactively advise customers, reducing the need for returns and optimizing operational efficiency. Additionally, AI connects stakeholders in the air cargo industry, enhancing predictability through insights and information sharing. “By identifying patterns and optimizing planning, AI contributes to better outcomes for the industry,” he explains.

Skillset and Cohesive Collaboration
When it comes to expertise, Kales Group stands out for its diverse team and commitment to continuous learning and innovation. Scholte sheds light on the company’s approach to training, upskilling, and staying abreast of new technologies, highlighting plans to share this wealth of knowledge as a potential strategic partner.
“Our team at Kales hails from diverse sectors of the industry, bringing a wealth of experience to the table,” Scholte says.
He emphasizes the company’s impressively low attrition rates, attributing the success to continuous training—an integral part of their approach. Learning isn’t confined to the company. As Scholte pointed out, they glean insights from the airlines themselves, particularly smaller carriers.
Representing 70 airlines, Kales has a unique vantage point in the best practices of each carrier, aiming to blend these insights for an optimal airline experience.
A distinctive capability showcased by Kales is Total Cargo Management (TCM). Scholte clarifies that TCM, far from being a mere buzzword, involves completely relieving airlines of their cargo operations. An example is the Total Cargo Management for Norse Atlantic Airlines, where Kales handles every aspect of a low-cost airline’s cargo operations, from IT systems and operational tasks to auditing, sales, billing, and even involvement in planning.
Addressing commercial planning processes like pricing and revenue management, Scholte clarifies that their approach is macroeconomic, focusing on larger corporations diversifying their supply chains. “While we don’t instruct companies on where to conduct their operations, we actively engage in developing our own solutions,” he emphasizes. Collaborating with dedicated partners, they optimize digital tools to cater to the specific needs of their customers, reflecting their commitment to innovation.

Air Cargo Market Dynamics and Post-COVID Trends
Scholte sheds light on the choice between air and sea freight, dispelling the misconception that air freight is always more expensive. “It’s essential to clarify that air freight can be more cost-effective for specific goods with high-value density,” he emphasizes, challenging traditional beliefs. In the post-COVID landscape, perishable goods and the pharmaceutical sector thrive in the air cargo market. “Our focus on reliability and innovation positions us strongly in these growing markets,” Scholte concludes, highlighting Kales Group’s commitment to shaping the future of air cargo.

Consultancy and Strategic Partnerships
Scholte is keen on leveraging Kales’ expertise beyond its current operations. “Certainly, it’s all about the interconnectedness of our operations,” he noted. Kales isn’t confined to selling from a single location; instead, their reach extends to wherever the airlines operate, even in regions where they don’t have a direct presence. The company establishes connections and effectively manages operations in those areas as well, forming a core part of its strategy.
“This approach is a core part of our strategy, and we are eager to further expand on it,” Scholte emphasizes. Whether it’s a startup or an existing carrier with cargo operations, if an airline is looking to streamline its processes and outsource cargo management to experts with a deep focus on this field, Kales Group is well-equipped and enthusiastic to take on the task. The vision is clear—collaborative excellence, continuous innovation, and a commitment to being a strategic partner in shaping the future of air cargo.

Strategic Network Planning for Revenue Optimization
Network planning is a critical aspect where Kales excels. Unlike some airline cargo departments, the company places a strong emphasis on optimizing revenues through informed choices in destination planning. Scholte explains, “By suggesting flying to one destination over another, we can significantly enhance revenue generation.” This collaborative approach ensures that Kales works hand-in-hand with airlines to make choices that align with the airline’s best interests.

Environmental Sustainability Efforts: A Dual Focus on Technology and Operations
According to Scholte, sustainability is a vital aspect of Kales Group’s strategy. “We focus on aircraft engines, airplanes, and innovations related to fuel, including biofuels and other technologies. These are key elements of our sustainability strategy,” he says, noting that the company places a strong emphasis on efficient cargo management.
Scholte further said, “Optimizing load factors from, say, 60% to 70% results in a one-sixth or one-seventh reduction in total emissions per kilo, making a significant positive environmental impact.”
He underscores that this commitment goes beyond rhetoric. “This may sound like a sales pitch, but it’s indeed true. Higher load factors translate to more eco-friendly solutions per kilo of cargo,” Scholte emphasizes.
Scholte believes in the positive impact of improved collaboration within the supply chain. “Fewer trucks waiting and higher load factors contribute to fewer trucks on the road. In essence, the better we can cooperate and streamline our supply chain operations, the more beneficial it is for the environment,” he states.

The Future of Kales Group: Growth Trajectory and Global Expansion
Discussing the company’s growth trajectory, Scholte notes, “Our growth trajectory is certainly on an upward trend, with an increasing number of airline partnerships.” Despite industry trends, Kales Group observes a different pattern. “Airlines are still inclined to reduce costs and operate as lean as possible, which often involves outsourcing. We find ourselves at a crossroads in this regard.”
Geographical expansion is a key agenda. Scholte expresses, “We are actively exploring opportunities in Asia and Latin America. Our geographical focus for expansion lies in these regions, with recent growth in India. Looking ahead over the next five years, we aim to establish even more partnerships with carriers.”

DXB cuts its waste sent to landfills by 60%

Dubai, United Arab Emirates – Dubai Airports, the operator of Dubai International (DXB) and Dubai World Central (DWC), announced it has cut by 60% its waste sent to landfills from DXB, a major sustainability milestone in its history.

DXB is one of the busiest airports in the world. This year, its forecast annual passenger traffic is expected to reach 86.8 million, surpassing its record in 2019.

Dubai Airports says the waste reduction scheme is part of its broader sustainability goals to reduce DXB’s carbon footprint while setting an industry standard and inspiring its guests to be more environmentally conscious.

Dubai Airports’ waste management initiative outlined an innovative food waste treatment plan to capture and compost more than 2,000 tonnes of food waste annually from food and beverage outlets, lounges, and hotels across DXB terminals and concourses.

Dubai Airports partnered with BEEAH Group, a holding company with businesses pioneering sustainability, including through industry-leading waste management, to create and implement the food waste plan. The project was structured in three phases: the distribution of food waste bins, comprehensive training, and the processing of more than 400 tonnes of food waste yearly since its launch.

Paul Griffiths, CEO of Dubai Airports commented: “Sustainable waste management is a crucial step in mitigating environmental impact and reducing our ecological footprint. Diverting 60% of our waste from landfills is testament to our collaborative efforts with stakeholders at DXB and highlights our commitment to sustainable practices and the UAE’s broader sustainability agenda, aimed at achieving Net Zero by 2050. We’ll continue to launch initiatives like this so we can continue to create a better tomorrow, together.”

Dubai Airports’ waste diversion strategies include separation of recyclables at the source, on-site composting of organic materials, and close collaboration with key stakeholders like DXB Hotel, lounge operators and key commercial Food & Beverage partners, to ensure effective waste management and the highest possible level of diversion from landfills. It includes a special initiative that captures 100% of all cooking oil used in food and beverage outlets and converts it to biodiesel fuel.

“We would like to congratulate Dubai Airports for achieving 60% landfill waste diversion, a landmark milestone for the world’s busiest international airport. By providing sustainable waste collection infrastructure and services, BEEAH provides one part of the solution to the challenge of waste and emissions. The other part is collaboration, as demonstrated in this partnership with Dubai Airports, to achieve tangible and positive climate action. We look forward to continuing our joint efforts to turn the challenge of waste into opportunities for a sustainable future,” said Rafael Lopez, CEO of BEEAH Tandeef, BEEAH’s waste collection and city cleaning business.

Dubai Airports continues to work with its concessionaires to align operations with its environmental sustainability goals related to waste and water management, and efficient use of electricity. Through a collaboration with Emirates Airport Services Lounges, additional training and awareness resulted in waste reduction, conscious procurement, and energy-saving lighting.

A similar collaboration with Emirates Flight Catering, the largest food producer at Dubai’s Airports, has reinvented itself to recycle glass bottles, compost food waste and reduce waste to landfills.

Waste management at Dubai Airports consists of managing the stakeholders’ waste streams. This consists of aircraft cabin waste (37%) and municipal solid waste generated throughout the concourses and the terminal buildings (55%) both of which make up around 92% of the total waste generated daily. The waste management plan has helped the airport save 38% in operational costs monthly, due to the recovered value of recycled materials.

Changi Airport Southeast Asia’s powerhouse cargo hub

In 2022, Singapore Changi Airport ranked as the 10th busiest air cargo hub by international airfreight, firmly establishing itself as Southeast Asia’s prime gateway for international cargo traffic. A remarkable 1.85 million tons of airfreight passed through its terminals in 2022, with an impressive 1.3 million tons handled within the first nine months of 2023. Notably, Singapore achieved the pinnacle of logistics excellence by topping the World Bank’s 2023 Logistics Performance Index (LPI) in trade logistics performance.

As a leading global air cargo hub, Singapore Changi Airport’s success hinges on building trust, enhancing service quality, and delivering unwavering reliability. This pursuit of excellence is underpinned by a strategic focus on fostering network and connectivity, improving operational efficiency, and bolstering handling capabilities through robust partnerships and community stewardship.
At the heart of its prowess lies a vibrant ecosystem of airlines, express integrators, logistics service providers, freight forwarders, truckers, and ground handlers, all seamlessly connected to approximately 140 global cities.
With over 100 airlines, including 30 freighter operators, and 530 weekly flights, the airport boasts one of the most expansive networks in the Asia Pacific, firmly positioned at the forefront of Southeast Asia’s expanding manufacturing, trade, and logistics landscape.

Pharma Excellence and European Expansion:
Moreover, the airport excels in catering to the unique needs of special cargo, such as pharmaceuticals, perishables, high-tech, and e-commerce. In 2017, Changi Airport Group (CAG) launched the Pharma@Changi Initiative, uniting IATA CEIV Pharma-certified companies in Changi.
This initiative is dedicated to elevating air pharma transportation standards, ensuring that all staff involved maintain the product’s integrity. Pharma@Changi underscores its commitment to becoming the trusted regional pharma gateway.
Additionally, Europe became the airport’s second-largest air trade region in 2022, with a key trade lane to Belgium for high-value cargo like biopharmaceuticals. In March 2023, CAG signed an MOU with Brussels Airport Company to enhance pharma air logistics and share best practices. The launch of non-stop passenger services to Brussels in April 2024 will expand cargo capacity between Singapore and Belgium.

E-commerce Advancements and Community Collaboration:
E-commerce is a vital segment for the airport. The Southeast Asian e-commerce market is set to triple, growing at a CAGR of 22%. The airport welcome an MOU between SATS and SingPost (Singapore’s national postal agency) to establish an advanced eCommerce transshipment hub in Singapore, streamlining cargo logistics for quicker deliveries and cost reduction.
The airport is forging a more interconnected air cargo ecosystem, fostering community collaboration. The Changi Air Cargo Community System (ACCS), with its Truck Dock Slot Booking (TDSB) application, streamlines cargo processes and enhances transparency. The completed pilot phase paves the way for a community-wide rollout in early 2024, aligning with its sustainability goals.
To gain a more profound insight into CAG’s air cargo strategies and its vision for the future, Air Cargo Update had the opportunity to sit down with Lim Ching Kiat, the Executive Vice President of Air Hub & Cargo Development at Changi Airport Group (CAG).
In this exclusive interview, he sheds light on the airport’s pioneering approaches and forward-looking initiatives in the field of air cargo. Let’s hear directly from him about CAG’s commitment to excellence and its plans to shape the future of air cargo.

How is CAG integrating technology, including AI and robotics, to enhance air cargo efficiency?
CAG is collaborating with its partners to trial autonomous solutions, such as autonomous tractors, to reduce manpower in airport ramp operations, including baggage and cargo transport. Promising trials are already underway, and Changi anticipates achieving fully driverless baggage delivery operations by 2024. Additionally, the airport is implementing asset-tracking solutions for motorized ground support equipment to achieve optimized deployment, increase productivity, and enhance overall ramp handling.
The airport’s cargo terminal operators are also investing in warehouse automation and digitalization projects to address manpower challenges and enhance efficiency and capacity. In partnership with logistics technology solutions provider Speedcargo, dnata has implemented Cargo Eye and Assemble solutions for Etihad Cargo at Changi Airport. Cargo Eye employs advanced vision-based 3D technology to capture precise dimensions, volume data, images, and labels of the cargo, creating a comprehensive digital record. Assemble then generates a digital plan, optimizing the pallet-building process and providing valuable guidance to cargo handling teams. This innovative technology is being considered for integration with other airline partners, contributing to the continuous improvement of business operations.

What sustainability initiatives has the airport undertaken to reduce its environmental impact in air cargo operations?

Sustainability is a significant focus for the airport. In its endeavor to build a more sustainable air cargo hub, the airport adopts a comprehensive and community-oriented approach. Key areas of emphasis in CAG’s environmental sustainability strategy encompass mitigating carbon emissions, enhancing waste management, transitioning airside vehicles to cleaner energy sources, and intensifying collaborations with industry partners to create a more sustainable Changi.
Leveraging technology and digitalization, the airport not only streamlines processes and enhances supply chain efficiency but also reduces the environmental impact of air cargo operations. For instance, the Truck Dock Slot Booking (TDSB) system within the Changi Air Cargo Community System (ACCS) platform optimizes trucking operations, minimizing idle time, and significantly decreasing carbon emissions from cargo transportation.
The airport is also committed to improving waste management practices and advancing toward a circular economy. At the Changi Airfreight Centre (CAC), CAG actively implements strategies to minimize waste generation.
In the domain of sustainable energy, CAG has established more than 100 Electric Vehicle (EV) charging stations at its airside facilities, backing an entirely electric baggage tractor fleet. Beginning in 2025, all newly acquired airside light vehicles, tractors, and forklifts will be mandated to be electric, with an aspiration for all airside vehicles to be powered by more environmentally friendly sources by 2040.
Over the coming years, the charging network will expand to over 300 points, aligned with its airport partners’ needs. The EV charging infrastructure at the CAC will also undergo upgrades. For vehicles and equipment that lack viable electric alternatives, Changi is conducting trials to power them with renewable diesel.
With the primary objective of reducing carbon emissions in the aviation sector, CAG collaborates closely with industry and regulatory partners, facilitating trials and engaging stakeholders to promote the adoption of Sustainable Aviation Fuel (SAF). The expansion of Neste’s refinery in Singapore will enable the annual production of up to one million tons of SAF, allowing the airport’s airline partners to achieve their sustainability goals.
As a founding and strategic member of Pharma.Aero, CAG plays an active role in developing and driving projects to enhance air pharma transportation. A notable project is the Green Air Pharma Logistics, where Changi and project partners aim to establish a green air pharma lane with qualitative and quantitative measurements. These collaborative initiatives underscore the airport’s unwavering commitment to global sustainability efforts and the pursuit of greener air cargo logistics.

What are the airport’s plans for the new air cargo terminal at Terminal 5, and how will it enhance its capacity and capabilities?
The airport’s long-term vision encompasses the Changi East Development, featuring the construction of the new Terminal 5 and the establishment of the new Changi East Industrial Zone (CEIZ). The CEIZ is set to become a preferred hub for airfreight, air express, e-commerce transshipments, and MRO activities, with a slated completion date in the mid-2030s. This expansion will also bring about a substantial increase in freighter bays, enabling the airport to better serve freighter operations in the future.
In conjunction with the revitalized CAC, which forms an integrated cargo village, the airport’s cargo handling capabilities are set to increase from the current 3 million tons per annum to 5.4 million tons annually at the end state. The upcoming CEIZ will provide an opportunity for the airport and its cargo partners to grow, strengthen their operations, and tap into emerging opportunities.

Lastly, what are the airport’s future air cargo opportunities and challenges, and how is it preparing for them?
The challenges encountered by most air cargo hubs include the constant rise in costs, labor shortages, environmental sustainability concerns, and the ever-increasing expectations of shippers.
Changi Airport recognizes the pivotal role of technology and automation as catalysts for sustainable, long-term air cargo growth. Initiatives like the TDSB application integrated within the Changi ACCS platform, autonomous tractors, and asset tracking solutions for ground support equipment exemplify the airport’s commitment to utilizing technology and automation to unlock greater productivity and capacity for the hub.