Saudia Cargo looks to Bangladesh and Kenya
21 / 11 / 2016
Saudia Cargo has been reporting strong improvements in demand on its Kenyan and Bangladesh services over recent months.
The airline’s vice president commercial, Rainer Mueller, told Air Cargo News that at the start of October it had increased its capacity from Kenya by 25% through the addition of new freighter flights to Brussels and Frankfurt.
Capacity from Bangladesh was up by 33% through the addition of a fourth weekly flight from Dhaka to central Europe via Saudi Arabia.
He said: “Saudia Cargo has been established in Kenya for a couple of years and we are putting a lot of focus on this market and also offering tailor-made products for our customers over there.
“This has been well acknowledged by our customers and in the end it was our customers encouraging us to add capacity.”
In the apparel driven Bangladesh market there is still a ban on direct airfreight shipments from the country to the UK, Germany and Australia because of concerns over a lack of security measures at Dhaka Airport.
However, cargo from Bangladesh is still allowed into these countries if it is scanned at another location.
This has seen some airlines reduce capacity from the market, while Saudia has been increasing space.
Mueller said that Saudia flies cargo from Bangladesh to Brussels via Saudi Arabia before trucking it to the final destination.
He added that the airline was assessing whether to add even more capacity out of the country.
Looking at the wider market in 2016, Mueller said that Saudia had recorded an overall improvement in demand this year, although there was a holiday related slowdown in September, with the pace of growth picking up as the year progressed.
He said: “We notice that there is an increase in demand from the Far East; China and Hong Kong that seems to be as per the season. There is also demand picking up from Europe.
“The question is, how long this going to last? What is going to happen in January and February?
“Last year we saw a similar development until the beginning of January and then a big drop after mid-January.”
Mueller went on to question how much of the demand improvement registered by the market in general is actually caused by a switch from the direct flights of freighters to transhipments using belly space.
“A major portion of the freight tonne km (FTK) growth rates that have been reported is just cargo being routed via other gateways instead of being flown direct, which adds kms even though there is no real tonnage growth.
“My impression is that what you see right now is a shift of cargo on certain routes and lanes from freighters to bellies, meaning that those airlines with empty capacities on their bellies are stepping into this market and taking a certain portion of that cargo via their hubs.”
A major ongoing challenge faced by the industry is low yields. Mueller said the situation is not being helped by certain airlines pricing freighter capacity to match that of belly space.
He said: “What needs to be done is that carriers once again start to differentiate their belly and freighter pricing and not compromise freighter rates because of empty bellies.
“In the end freighters are needed by the industry on certain routes and on certain lanes and this is a responsibility that we have to take.
“From our point of view, what should be done is you differentiate your rates: These are rates I am offering on my bellies and these are my maindeck rates.”
Mueller added that he had noticed that forwarders were not necessarily taking up the low rates offered by some operators because they were concerned about the longevity of the services based on the prices.
“Our customers; the forwarders, the shippers, they are expecting a sustainable product, not something you go in and then go out of if it’s not working,” he said.