The arrival of more capacity in 2023, including the airline group’s own B767Fs, means Challenge Group is expecting lower yields this year. But commercial vice-president Or ZAK remains confident yields will stabilise to a sustainable level between their levels in 2019 and the highs achieved during the pandemic
What are your expectations about how the market will develop in 2023?
The first 6-9 months will likely be in line with the second half of 2022, with a notable slowdown. But we expect and hope for an upturn in production in China that will revitalise the market. We are ready for the challenges that 2023 will bring and remain confident of a peak in the last quarter of the year.
What challenges and opportunities do you anticipate, and how do you plan to respond to these?
Challenge Group is a highly diversified conglomerate, capable of managing air cargo transportation from the beginning to the end of the supply chain. This diversification allows for risk mitigation. In addition, we have diversified our routes, the markets in which we operate, and our partners. We are constantly exploring these new markets, as the recent opening of the route to Istanbul demonstrates.
For 2023, we expect a good mix between schedule and charter. But beyond that, our expertise is well recognised and our reputation in handling complex verticals has been proven several times. More than 65% of the cargo carried by Challenge Group is non-standard and requires special handling.
What role will new and emerging technologies play?
Digitization has been a key topic for some time now, and not just in our industry. Indeed, we are moving towards an app-driven society. We must not forget the lesson learned from the pandemic when digital tools saved us from the general inability of staff to get to the workplace, for example. The e-business model should be seen as a guide to create a digital environment that will facilitate the various interactions within the supply chain. But technology must not forget the human factor that it will ultimately serve. Efficiency is a goal for us and we have a coherent digital strategy in the pipeline… We will be making announcements in this regard shortly.
How can you and other stakeholders in the air freight supply chain work more effectively in 2023 (and beyond) to streamline cargo operational processes and improve cooperation across the air logistics chain?
Cooperation is the DNA of our value proposition: our approach to business is based on strategic partnerships, in line with the concept of the shared economy, and our mission is focused on our customers’ success. This is why we trust the constant support of our business partners, as we have been able to create strong and lasting relationships over time. Moreover, one of the scopes of our digital journey is to streamline our processes towards more-efficient operations.
What have you been doing in 2022 to improve air freight efficiency, processes, operations and communications, and what will you do in 2023?
Our internal structure has evolved to better respond and adapt to the changing market. For example, our Charter department has been strengthened in anticipation of the demand. At the same time, we set up a key account procedure and raised the operational standard CEIV Live animal. Without forgetting, of course, the strengthening of our fleet, with a fleet expansion plan built on twin-engine aircraft, either B767 or B777.
Any other observations about your expectations for air freight in 2023?
2023 will see the arrival of more capacity, including our B767Fs. Therefore, we are expecting a lower yield, but we stay confident that it will stabilise to a sustainable level between what was in 2019 and during the pandemic.