Qatar Airways Cargo leads the way

Published: Wednesday, May 11, 2016

Qatar Airways Cargo has grown at a phenomenal pace especially in the last one decade and it recently attained the third position of being the world’s third largest international cargo carrier. Serving more than 50 exclusive freighter destinations worldwide through its state-of-the-art Doha hub, Qatar Airways Cargo delivers freight to over 150 key business and leisure destinations globally on more than 180 aircraft. It’s freighter fleet now includes eight Airbus 330Fs, nine Boeing 777 freighters and two Boeing 747 freighters.

The carrier’s network provides a global reach for customers in Africa, Europe, North America, South America, the Middle East, South East Asia and North Asia. With a zeal to constantly expand, the airliner has been extending to multiple destinations within each of these countries, increasing frequencies and number of locations. It recently began offering belly-hold cargo capacity for its US customers on daily flights to Boston, offering 40 tonnes into Boston and an estimated 90 tonnes out of the Massachusetts city.

The cargo carrier also recently won the prestigious All-Cargo Carrier award at the 33rd Cargo Airline of the Year event and the International Award for Excellence in Air Cargo at the Air Cargo India 2016 exhibition and conference.

We spoke on this and many other subjects with Mr. Ulrich Ogiermann, Chief Officer Cargo of Qatar Airways Cargo.

Excerpts from the interview:

Qatar Airways began offering cargo capacity for its US customers recently and the carrier is expected to ship up to 40 tons a week of freight into Boston and an estimated 90 tons of cargo a week on the flights out of the Massachusetts city. How is this route working for you? Are there any more new destinations in the US you are looking to expand cargo facility to?

We are seeing good loads on the daily A350 flights into and out of Boston, our 14th destination in the Americas. The majority of exports out of Boston are lobsters, primarily headed to major Asian markets, including Hanoi, Shanghai, Beijing, Guangzhou, Singapore, Yangon, Hong Kong and Seoul. Our solution, QR Fresh, is able to preserve the quality and extend the shelf life of perishable items. This innovative solution maintains optimal temperature for perishable products such as fruits, flowers, vegetables, meat, and fish from their origin airports through to their final destinations.

There is vast opportunity for growth in the US market as our expansion in the Americas indicates. Just this year apart from Boston, we have added belly-hold capacity to Los Angeles, increased belly-hold cargo services to New York with double daily flights and we will add further capacity with the launch of our new passenger service to Atlanta in June. Our upcoming daily passenger flights into Atlanta, which is already served by freighters, will add more than 300 tonnes of belly-hold cargo space monthly to meet the robust demand of the destination. We believe introducing our products in markets now served with commercial air service, such as Atlanta, will offer a competitive advantage, thereby contributing to our positive outlook for the year.

We have identified niche areas and industries which can benefit from our specialized products such as QR Pharma, launched to support the pharmaceutical industry by offering export opportunities to more than 150 destinations worldwide via our global network. To date, the Americas market contributes approximately 10 per cent of Qatar Airways Cargo’s overall network capacity.

Qatar Airways Cargo is confident that the rise of exports in the America’s international trade during 2016 will continue to drive the demand for cargo services. To meet this growing demand, we are currently offering more than 5,000 tonnes of combined freighter and belly-hold air cargo space every week into the Americas.

At a time when global air freight scenario is not looking great, and at a time when international air cargo traffic grew only 2.5 per cent in 2015, Qatar Airways announced it has grown its tonnage by 37.5 per cent, based on its year-on-year figures from 2014 to 2015. How did you manage to achieve this?

We have achieved this phenomenal growth through a combination of fleet and network expansion, creative interline agreements and by deploying capacity on expanding or untapped markets. We also always have to keep in mind that an important part of air cargo service quality occurs on the ground. Managing the export acceptance, the import delivery, and timely transport of shipments each year is an operational challenge.

Therefore, we are constantly on the watch for ways to improve our service and operational capabilities. For example, Qatar Airways Cargo offers the fastest airline transfer at Doha through its Quick Ramp Transfer (QRT) solution. We are the only carrier in the Middle East to offer refrigerated or ‘reefer’ truck services for ramp transfers at its home hub. Sensitive commodities are collected from and delivered directly to the aircraft by specialised temperature controlled vehicles, in an effort to ensure that the cool chain process is seamless, thereby eliminating risk to temperature exposure. We are also making good progress on the e-AWB front and are seeing a steady increase in the implementation of e-AWB across our network.

Further tonnage growth is expected for 2016 as more aircraft join the expanding fleet and more destinations are added to the route network. Another Boeing 777F and 747F recently joined the fleet, bringing the dedicated Cargo fleet to 19 aircraft.

You also revealed that import cargo into Doha increased by 29 per cent, while exports out of Doha increased by 10 per cent. What are your projections for 2016 especially at a time when the global air freight market is not very encouraging?

Qatar has established itself as a global hub and has invested in significant infrastructure projects and aspires to become a world-recognised logistical centre with the development of free trade and logistics zones expanding. Qatar Airways Cargo is perfectly positioned at Hamad International Airport with its state-of-the-art facilities to capitalise on this.

The Middle East is benefitting from the stability of traffic flows from east to west and increased demand for perishable products to the rapidly expanding consumer population in the GCC countries. Multiple large construction projects as well as the oil and gas industry in Qatar and other GCC countries also ensure heavy demand for import flows.

One of the greatest challenges that we can confidently say we have solved is the perception of customers regarding temperature control. Our quick transfer solution and temperature-controlled vehicles, which meet the aircraft on arrival at the hub, prevent heat exposure from the moment shipments arrive on the tarmac.

From July 2016, Qatar Airways will switch from operating A320 aircraft on its Doha to Geneva route to using Boeing 787 ‘Dreamliner’ equipment. How is this route expected to expand business opportunities in Geneva in particular and Europe in general?

With the capacity increase ex Geneva we will be in a position to offer our reliable services from all three major Swiss Airports on direct wide-body flights to Doha. Our valued Swiss customers will benefit from shorter transit times from Geneva to our network of more than 150 destinations. The new service will also allow us to offer increased flexibility for larger bookings on short notice. Geneva will also be added as an approved network point part for our “QR Pharma Network” which is important for the Swiss pharmaceutical industry. Another added value from Geneva will be the implementation of the “e-AWB single process” effective 1 October 2016. The additional capacity in the Swiss market is part of our strategy to strengthen our position in Europe overall and in particular in Switzerland by offering sustainable and on-line solutions to our valued customers.

How are you planning to expand freighter capacities to the other European countries in 2016?

We started freighter services to our first European destination Amsterdam in 2003 and today operate freighters to fourteen European destinations and offer belly hold capacity to more than thirty European cities. We recently launched three new freighter routes to Budapest and Prague, bringing up our freighter destinations in Europe to 14.

The Doha – Budapest – Prague service providing 120 tonnes of weekly cargo capacity on the A330F per way will be allocated evenly between the two markets. This new route provides a major new gateway into Eastern Europe from Asia for electronics and automotive parts, as well as textiles, pharmaceuticals and biotech products. Europe is definitely a significant market for Qatar Airways Cargo. As new aircraft and freighters join the fleet, Qatar Airways Cargo will be able to serve new and emerging freight markets and meet the increasing demand for cargo where it occurs.

Asia Pacific too remains an important sector for Qatar Airways Cargo. How much of expansion are you planning on this route this year?

With the introduction of twice weekly freighters to Ho Chi Minh City in March this year, we are able to offer our customers 120 tonnes of cargo capacity to and from the city per week, in addition to the 72 tonnes weekly belly-hold capacity on passenger flights to Ho Chi Minh. The additional capacity to and from Vietnam has been welcomed by exporters who see a growing market in the US and Europe via our hub in Doha for garments, footwear and handicraft. At the ITB Berlin this year, the Group Chief Executive Mr. Akbar Al Baker announced fourteen new destinations, one of them being Auckland, which would become the world’s longest flight. The commencement of flights to Auckland will greatly benefit the importers and exporters in the region as we offer them a wide range of products including a global network of over 150 destination via our state-of-the-art and world-class hub Doha.

What about expansion plans to Indian sub-continent in 2016 and years to come?

Frost & Sullivan, market research consultancy firm has said that cargo demand in India is expected to boost the airfreight market to 2.8 million tonnes by 2018 with the present 5.5 per cent compounded annual growth rate.
With all the growth and developments the country is witnessing, Qatar Airways Cargo is perfectly placed to meet the air freight requirements of our customers.

We have over thirty weekly freighter frequencies to India, serving the cities of Mumbai, Chennai, Delhi, Ahmedabad, Hyderabad, Bengaluru and Kolkata.

Additionally, we offer belly-hold cargo capacity on 102 weekly passenger flights to thirteen destinations in India. We are able to offer our customers more capacity due to the introduction and increase of wide body passenger flights to Delhi, Mumbai, Kolkata, Chennai, Kochi and Bengaluru. With the launch of new destinations in Europe and the USA, we are reviewing increased freighter frequencies from India to cater to the growing air cargo demand in these continents via our hub in Doha.

How much of freighter capacity is carried on belly cargo? As an airliner with a great passenger which works better for you: Belly capacity or freighters or a combination of both? Elaborate

The airline splits its cargo capacity across its freighters and passenger aircraft with 51 per cent of shipments carried on freighters compared to 49 per cent in the belly-hold.

The cargo business always welcomes additional belly capacity to its network for two reasons:

• Belly capacity is very cost efficient, which is appreciable in an industry where yields are always under pressure
• Belly capacity is generally planned daily, and the high frequency count is a key selling point for high yielding products like express or pharmaceuticals

The combination of efficient belly space, plus freighters where you can flexibly adjust to the needs of the cargo business is the most ideal and cost efficient combination you can have and this is what we offer our customers too.

Elaborate on your ambitious plans to create a second, larger cargo terminal at Hamad International Airport in Doha by 2018. How will the new facility, along with the current facility allow Qatar Airways Cargo to expand its cargo capacities?

Our Group Chief Executive, His Excellency Mr. Al Baker, recently revealed plans to create a second, even larger cargo terminal at our hub. The new 110,000sq.m double decker facility will have the capacity to handle three million tonnes of cargo a year, increasing the facility’s overall annual capacity to 4.4 million tonnes. The new cargo terminal, which is scheduled to open in 2018, underlines our commitment to continued growth and expansion in line with the airline’s group objectives for the future. Having the ability to handle 4.4 million tonnes of cargo a year will put Qatar Airways Cargo into another league, and enhance the efficiency and service already offered at our existing state-of-the-art facility.

Our cargo terminal at Hamad International Airport offers state-of-the-art technology and service to customers around the globe. Our exceptional Quick Ramp Transfer (QRT) has the fastest airline transfer at Doha, while a dedicated team is committed to ensuring all shipments are safely and timely transported on board, and delivered to destinations. Our state-of-the-art hub opened in 2014 and has increased our capacity from 400,000 tonnes at our former facility at Doha International Airport (DIA) to 1,400,000 tonnes. The new fully-automated, air conditioned facility has 42 airside loading docks, 31 landside loading docks, parking space for 11 code F freighters, and 42 workstations, which has taken our whole business to another level compared to the level of service we could offer at DIA. The 292,000sq.m cargo complex area also includes a 4,200 sq.m live animal facility, giving us the potential to offer the best care available to live animals entrusted into our care both on the ground as well as in the air.

New addition to the QR Pharma, QR Fresh and QR Equine specialised services of Qatar Airways Cargo is the QR Express services. Elaborate on the service. Any other specialised services planned to be rolled out soon?

QR Express is a solution to deliver airport-to-airport air freight service for time critical shipments. It is the latest addition to our expanding portfolio of specialized services and products. Customers can book time-sensitive shipments via a quick and simple system that offers high boarding priority and rapid handling, ensuring speedy delivery of their cargo. Other key features include short and flexible close-outs, quick and dedicated ramp transfer (for express transit), as well as priority loading at origin and unloading at final destination and speedy retrieval at final destination (approximately 90 minutes). This new product enables our customers to ship time-sensitive cargo with the knowledge that transit time will be minimized and is the ideal solution for supply chain process and fast moving consumable goods.

We are constantly looking for innovative solutions to meet our customer’s expectations and are in constant dialogue with our customers to ensure we provide the best services.

Our customers are also offered the QR Charter solution giving them the option of full, partial and combination charter options. Utilizing the most modern freighter fleet of Boeing 777F, Airbus A330F and the nose loader Boeing B747F, we are able to meet our customers air freight transportation requirements in the Middle East and globally.

Qatar Airways Cargo attained the number three position 2015-end, rising from number three position from 16th place in just five years. What are your growth strategies for the coming years?

We believe that quality of service is the key to sustainable growth. Customers will keep coming back for more if they are happy with the service they receive. More than this, if customer expectations are exceeded, they will themselves promote it amongst their peers in the industry. So, by Qatar Airways Cargo focusing on what customers want, through understanding their needs, and tailoring our offering to this, we can build further on the quality of customer experience to achieve growth.

Our rapid expansion is also due to the continued investment and expansion of our fleet. We expect to receive further aircraft this year and to expand to a total of 21 freighters by 2017 up from 19 freighters currently, demonstrating our unwavering commitment to developing one of the strongest air cargo fleet in the skies.

The industry is moving towards e-airway bills, electronic interactions, and booking systems. One of the key success factors here is the IT infrastructure. The off-the-shelf products we found were not suitable for us, so we decided to develop CROAMIS as a joint venture with a global IT company. We are starting to market and offer this product to others in the industry as well, and we’ve had incredible feedback. It’s developed as an end-to-end system and designed from a pure cargo carrier’s point of view. From handling, billing, accounting, booking, and optimization of flights, it covers the entire chain. Just recently, we announced the launch of our first mobile app QR Cargo, available for both Android and iOS devices via Google Play Store and Apple App Store. This application aims to provide ease and convenience to the cargo airline’s customers, by having all the important information at their fingertips on their mobile devices. In addition to getting detailed status of their shipments, customers can now use this app for various enquiries such as Qatar Airways passenger flight and freighter schedules, office contact details, product descriptions and more. The app is linked to our in-house Cargo Reservations, Operations, Accounting and Management Information System (CROAMIS), which provides real-time data and updates for each logistic milestone achieved, direct to our customers.

It’s great for customers to see where their product is at in the shipment process. So it’s a complete, integrated approach based on the latest technology. It’s a big step for us, and we are confident that this will be a very successful product in the market.

We are also focused on achieving consistency of handling in terms of safety, security, quality and operational delivery. We set high standards for these disciplines and the capabilities of the ground handling agents are rigorously assessed with each new route launch or expiry of handling contract at existing stations. Our Network Handling Partner program enables us to have an established framework with the global handling companies to ensure our specific requirements are met, irrespective of location. Qatar Airways Cargo is committed to its plans for growth and expansion, and we believe we are extraordinarily well positioned to compete and win in any economic circumstance.

We are confident we have the ingredients for success lined up, but this is a testing time for us. There are some bright spots in the outlook though with pharmaceuticals, manufacturing spots changing, trade patterns are changing, and e-commerce on the rise. Pharmaceutical products are of great importance for us, we have been working hard to get trade lanes certified by the big shippers. I think the biggest areas we will see growth is in pharmaceuticals, textiles, and perishables this year. We will continue to grow by matching the quantity of our capacity with the quality of our product, with a particular focus on a successive launch of exciting new products, backed up by state-of-the-art ground infrastructure and a team composed of the best talent in the industry.

Your thoughts on the future of air cargo industry especially at a time when the global market does not look very encouraging

The global market indicates that the overall cargo business will be flat for 2016, but we expect to outperform the market by strategically placing capacity in the right areas and offering the right combination of cargo products to the right destinations. We have consistently gone against the trend in terms of growth in recent years; while other airlines have been reducing their cargo capability we have grown from position 16 to number three in IATA’s international FTK rankings in just 5 years.