Thursday, March 24, 2016

Cargo Carriers Report Good News as Air Freight Figures Released

Low Fuel Costs Help Boost Earnings
Shipping News Feature
LUXEMBOURG – RUSSIA – It would seem that the European air freight market is proving positive for some of its major players with Cargolux, which claims the title of Europe’s largest cargo only air carrier, reporting that, in this its 45th anniversary year and against a background of low yields, continued overcapacity and declining volumes, it has realised a net profit after tax of $49 million whilst achieving record levels of tonnage and block hours. Meanwhile Volga Dnepr subsidiary AirBridgeCargo Airlines (ABC) is also seemingly on the up.

The Cargolux Group in 2015 grew its freight tonne kilometres (FTK) by 8.7%; the company currently ranks at No. 7 among the world’s cargo operators, according to IATA data, and positioned itself above the average growth rate of IATA’s top 20 air cargo carriers. With 26 Boeing 747 freighters at year-end, a mix of 747-400 and 747-8 freighters and the largest fleet in its history, Cargolux achieved a record 114,792 block hours, an increase of 8.8% over the all-time high in 2014 and carried a total of 889,652 tonnes of freight on its global network, 7.4% more than in 2014.

For Cargolux, its satellite Chinese hub, Zhengzhou, was a major focus during 2015. Flights increased to 13 per week by year-end and the company introduced transpacific services between Zhengzhou and Chicago. By the end of 2015, Cargolux had flown over 65,000 tons of freight to and from Zhengzhou. In early 2016, the Cargolux Board of Directors approved an investment of $77 million for ‘Cargolux China’, the new joint venture Chinese cargo airline based in Zhengzhou and the new carrier is expected to start operations in 2017, focusing on transpacific and intra-Asian routes. Its fleet is planned to grow to five 747 freighters within the first three years of operation.

Industrial relations have not always been easy for the airline but after long protracted discussions 18 months of intense negotiations resulted in a collective work agreement (CWA) between the airline and its social partners OGB-L and LCGB lasting until the end of 2018. Dirk Reich, Cargolux President & CEO commented:

“It is a sign of our company’s strength that, despite the energy we needed to achieve a CWA compromise, we managed to achieve a significant boost in our performance and a healthy profit, contrary to most of our European competitors. While this excellent result benefitted from a reduction in fuel costs, it is in large part due to the hard work of our people, as well as our strategy and the corresponding measures that we began to introduce in 2014 in order to reduce our costs.

“I want to explicitly thank everyone in the Cargolux family for their continued dedication and hard work. The long discussions with our social partners have helped us to come out a stronger company with a better comprehension of each other’s needs and concerns. This understanding, this passion for our work, keeps Cargolux at the top of the game and it is due to the little things that every single one of our staff has contributed.

“Spreading our wings for a global reach underlines our vision of being the Global Cargo Carrier of Choice and supports our strategy to grow our activities from a single hub in Luxembourg to multiple hubs and gateways in Zhengzhou, Milan, Hong Kong and Chicago. We will continue to expand our network and, with Cargolux China getting primed for take-off, we go wherever our customers want us to go, be it with Cargolux Airlines, Cargolux Italia or, in the future, Cargolux China.”

Meanwhile AirBridgeCargo Airlines, which is Russia’s largest commercial air freight carrier, has reported a 15% growth in its airfreight volumes in February, transporting over 37,000 tonnes across its global route network in Asia, Europe, North America and Russia. The airline's FTK rose 3% over the same month last year when ABC saw an extraordinary demand for air cargo services due to the strikes at US ports.

Particular growth was reported on North America-Europe routes, where ABC doubled its cargo traffic year-on-year. In terms of the nature of cargo, ABC enjoyed stable demand in its flower traffic in February. The airline performed nine special flights for customers on board its modern Boeing 747 freighters to satisfy peaks in demand ahead of St. Valentine’s Day (14 February) and International Women's Day (8 March). The freshly cut roses were transported from Ecuador to the cities of Amsterdam, Karaganda and Ekaterinburg, Novosibirsk and Khabarovsk.

One regular ABC customer pointed out that reliability in a logistics supplier was key to the business of moving the perishable cargo, requiring high levels of on-time delivery performance with flowers from time of harvesting to point of sale within 72 hours. Alexander Roschupkin, Commercial Director of ABC, commented:

“Our team will continue developing the airline's tailored service for its customers, including those from the flower industry. In February, AirBridgeCargo commenced services to Africa where we see growing volumes of exported perishables, including plants. We also see increasing need for air cargo services in other markets such as Latin America and plan to further expand the airline's offering by providing international customers with a wider choice of routes across the airline's international network and with special solutions to satisfy their airfreight needs."

ABC’s parent group, Volga Dnepr, specialises in heavy lift and project freight forwarding contracts and recently was called in at short notice to enable an urgent repair to a compressor at Russia’s only natural gas liquefaction plant, Sakhalin-2. The transportation project required operations using both An-124-100 and IL-76TD-90VD freighters from the airline’s fleet to move equipment from Kuala Lumpur, Malaysia, and Moscow to Yuzhno-Sakhalinsk on the Russian island of Sakhalin. Sakhalin-2 commenced operation after being commissioned in 2009 and has the capacity to produce around 10 million tonnes of liquefied natural gas (LNG) per year.

On board the IL-76TD-90VD flight from Moscow was a 14-tonne capacity heavy-duty multi-wheel 6 metre long trailer that was used to deliver a new compressor to the Sakhalin-2 site. This coincided with the arrival of 30 tonnes of special repair equipment carried from Kuala Lumpur on one of Volga-Dnepr’s An-124 freighters to repair the failed compressor. Alexander Guzenko, CEO of TGK Logistics, which organised the flights with Volga-Dnepr, observed:

“We had to organise this transportation and logistics solution quickly to ensure that the repair equipment needed to restore production was available at the Sakhalin-2 to minimise the plant’s downtime. Once again, thanks to the flawless quality of service offered by Volga-Dnepr Airlines we were able to resolve this urgent issue successfully in a highly time-efficient manner.”

Photo: The multi-wheeled trailer unloading in Sakhalin from Volga-Dnepr's IL-76TD-90VD freighter.