REGIONAL REPORT: Middle East & Africa

posted on 4th April 2018

The Gulf states and their carriers are continuing to reap the benefits of improvements in their air cargo infrastructure and cargo management systems, providing a model for others in the region, writes Mike Bryant

Middle East-based air cargo carriers such as Emirates SkyCargo, Qatar Airways Cargo, and Etihad Cargo have experienced extraordinary growth in the last decade, and this shows little sign of slowing, creating the welcome but nonetheless demanding challenge of ensuring that their cargo-handling facilities, capabilities, network, and infrastructure keep pace. And as they increasingly become established as industry-leading carriers, the emphasis on high-quality operations increases, even if some of the new destinations are themselves outside the traditional air cargo premier league.

For example, during 2015 and early 2016, new Emirates passenger destinations included: Bali in Indonesia; Multan in Pakistan; Orlando in the US; Mashhad in Iran; Bologna in Italy; Sabiha Gökçen in Turkey; Cebu in the Philippines; Panama City; and Yingchuan and Zhengzhou in mainland China, taking its network to 150 destinations in 80 countries and territories. And on the all-cargo side, the arrival of a 13th B777 freighter (bringing its fleet to 15 freighters, including two B747-400Fs) allowed Emirates SkyCargo to further expand its freighter network to include 16 cargo-only services.

Hiran Perera, senior vice president of freighters, comments: “For example, in the US, we added Rickenbacker to our Chicago route. We now serve Chicago four times a week with two flights going via Rickenbacker. In the Far East, we started freighter services to Vietnam with twice-weekly flights to Ho Chi Minh and Hanoi. We also increased our freighter frequency to Atlanta, Sydney, and Nairobi.”

And there’s little sign of this pace of growth slowing. “We expect to see healthy growth in all of our key markets in the coming year, especially in regions like Africa, the Middle East and North America,” Perera says.

Working closely with airport authorities and ground handlers is key to ensuring that any network expansion proves successful, he suggests − as well as for the smooth operation of an existing station. “We engage in regular dialogue and exchange of information with each other to continuously improve existing processes,” Perera notes.

“We have experienced good co-operation with airport authorities and ground handlers who see our partnership as a win-win for expanding trade opportunities in their countries and business growth for us. For example, when we launched our service to Rickenbacker in the US, the airport authorities worked closely with us to promote our services.”

Of course, there are ongoing challenges, whether it’s the geopolitical environment, the impact of lower oil prices on demand, or operational issues, Perera notes. “Nevertheless, we have been able to deal with these and continue to grow our business. In financial year 2014/15, we achieved a 6% increase in cargo handled, reaching 2.4 million tonnes, and in the first half of financial year 2015/16 we saw a 10% rise in cargo uplifted to 1.25 million tonnes.”

African opportunities

The continuing expansion of Qatar Airways’ passenger and freighter fleet enabled the launch of a new commercial service between Doha and Durban on 17 December giving Qatar Airways Cargo, which was previously transporting over 16,000 tonnes of cargo into and out of South Africa a year, an additional 40 tonnes of bellyhold capacity a week into the country. It complements a three times a week freighter service to Johannesburg the carrier has operated since 2012.

Ulrich Ogiermann, Qatar Airways chief officer cargo, comments: “Africa represents a huge potential cargo market with several opportunities lying mainly in the oil and gas, mining, telecommunication and perishable industries. We carry bellyhold cargo to 22 destinations in Africa and operate freighters to seven destinations. Freighters were launched to Accra and Djibouti last year and these routes are performing very well.

“Both Accra and Djibouti are important markets for Qatar Airways Cargo and for the Middle East. They provide our customers with further gateways into Africa.

“Our recent launch of new passenger service to Los Angeles has also had a positive impact on our capability in the US,” Ogiermann continues. “The bellyhold capacity of the B777 aircraft will offer an additional 80 tonnes of lift weekly to and from this major international air freight gateway, which we have been serving with a dedicated freighter service three times a week since April 2015. This service has been so successful that we are adding a fourth weekly freighter frequency on 19 January.”

January also saw the launch of a new freighter route to Dallas/Fort Worth, increasing the Qatar Airways network to six freighter destinations in the Americas. A Qatar Airways Cargo B777F flies twice times a week to Dallas from Liège in Belgium. In total, Qatar Airways Cargo provides service to 13 destinations in the Americas, with additional upload provided in the bellyhold of the airline’s commercial aircraft.

The airline recently welcomed its seventh A330F and first B747F nose-loader aircraft into the fleet, which now includes 16 freighters: seven A330Fs, eight B777Fs and one B747F. “We also expect to receive further aircraft this year and to expand to a total of 21 freighters by 2017, demonstrating our commitment to developing one of the strongest air cargo fleets in the skies,” Ogiermann says.

Ground-based infrastructure

The big Middle Eastern carriers have also continued investing in and expanding their ground-based facilities. Qatar Airways’ cargo hub at Doha’s Hamad International Airport (HIA) opened in 2014 and has increased the carrier’s capacity from 400,000 tonnes at its former facility at Doha International Airport (DIA) to approximately 1.4 million tonnes.

The new, fully automated, air-conditioned facility has 42 airside loading docks, 31 landside loading docks, and parking space for 11 code F freighters. Plus, Qatar recently revealed plans to create a second, even larger cargo terminal at the carrier’s Doha hub. The new 110,000sqm double-decker facility will have the capacity to handle 3 million tonnes of cargo a year, increasing the facility’s overall annual freight handling 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,” Ogiermann enthuses. “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.”

Away from Doha, Ogiermann says handling capabilities can vary greatly across different stations and regions, each bringing their own challenges and differences. “Our drive is for consistency of handling in terms of safety, security, quality, and operational delivery. We set high standards for these disciplines and the capabilities of (third-party) ground handling agents are rigorously assessed with each new route launch or expiry of handling contract at existing stations,” Ogiermann notes. “Our Network Handling Partner programme enables us to have an established framework with the global handling companies to ensure our specific requirements are met, irrespective of location.”

Etihad Cargo has also been investing in both its fleet and its ground handling infrastructure. Last November, Etihad confirmed that it will take delivery of two more B777 freighters, exercising options secured as part of the carrier’s massive US$67 billion mixed fleet order for 199 aircraft in 2013. The additional aircraft, valued at US$637 million at list prices, are due for delivery next year. Etihad Cargo currently operates three B777Fs, three B747Fs and four A330Fs.

On the ground, Etihad Cargo has benefited from the work being undertaken by the operator of its home gateway at Abu Dhabi International Airport. “Significant investment is being made in airports across the Middle East and Abu Dhabi Airport is no different,” says Etihad Cargo vice president David Kerr. “The airport’s Midfield Terminal project is progressing and will ensure Etihad Cargo can further grow its business from an enhanced hub operation. The addition of new infrastructure and a commitment to delivering operational excellence throughout the supply chain by all parties will help us to improve in this area.”

In Dubai, Emirates SkyCargo has, says Perera, enjoyed “a very smooth transition of moving our freighter operations to SkyCentral, our purpose-built, state-of-the-art facility in Dubai World Central (DWC). Since commencing operations in SkyCentral in May 2014, we’ve started reaping the benefits of efficiency and productivity of the facilities. For example, with our freighters parked just outside our facility, we now have the ability to move freight in and out much faster, as there is no need to make circuitous routes within the airport.

“Within 5 hours, we can connect from aircraft to aircraft between DWC and DXB (Dubai International Airport). With our dedicated temperature-control facility, cool dollies and temperature-controlled trucks, we are able to provide our customers with a cool chain right through, from aircraft to aircraft.”

Perera continues: “As SkyCentral was designed to be freighter-specific, this also means that we have the flexibility to handle big, outsized cargo, alongside normal cargo. We have a number of acceptance docks, so we can carry out simultaneous acceptance and delivery. In addition, being at DWC enables us to operate anytime and we are not restricted to non-passenger peak times. This gives our customers a lot more flexibility in moving their goods. More and more of our customers are now asking us to terminate their shipment in DWC because they find it easier and more flexible to transport their cargo (through there).”

Perera believes that building airport cargo infrastructure that supports the smooth processing and delivery of freight brings a benefit not just to the immediate air logistics chain, especially in airports that experience congestion. “What we’ve seen is that the countries that have invested in airport infrastructure, such as Dubai, Hong Kong and Singapore, have benefited from higher import and export opportunities because of their very efficient logistics systems, both inbound and outbound,” he notes. “That efficiency also reduces costs to the entire chain in the long run. So, infrastructure investment should not be viewed only as a cost, but a potential for increased trade and economic development for the country.”

Cargo management systems

As well as physical infrastructure, key to efficient freight handling lies in effective use of IT and modern cargo management systems play an important role. Etihad Cargo switched to a new cargo management system in January 2015 to provide its customers with better communication and improved handling processes. The new system was developed in partnership with Hermes Logistics Technologies to “meet specific requirements and to provide an integrated IT solution that would encompass all of the physical handling, documentation and messages in real-time”, Kerr outlines.

A key benefit of the system is that it ensures customers are better informed through real-time shipment tracking across the Abu Dhabi-based airline’s global network of 116 destinations, with updates being automatically forwarded to them on a regular basis, he explains. “The handling and tracking of cargo shipments across the hub in Abu Dhabi has been enhanced to become more efficient, with handheld terminals being used to identify, track and verify all shipment details.”

Cairo project

Cairo Airport Cargo Company (CACC) also recently went live with a Hermes air cargo management system. That switch-over represented the first stage of a two-phase project which will also see Hermes installed in a new CACC terminal currently under construction.

The new facility is part of a project called Cairo Cargo City that will eventually include three main terminals – Import, Export and Express. “When it’s completed, Cairo Cargo City will cover over 150,000sqm and will help CACC take the logistics market in Egypt to a new era of advanced logistics operations where process chains run smoothly in a synchronised manner,” says Amir Boulos, general manager finance and administration for CACC. “The introduction of Hermes will allow us to compete at the highest levels, and provides the fast and efficient cargo clearance services expected by our customers now. We are already planning the installation of Hermes into our new facility which will be completed in Q1 2016.”

According to Steve Montgomery, Hermes’ chief cargo officer, players in the Middle East’s air freight sector are making a concerted drive to invest in new IT systems to continually improve the quality and flow of transit cargo through the region. “The new CMS systems are improving processes by offering visibility and steering, especially of high priority pharma and perishable cargo,” he says. “We are also seeing companies in North Africa investing in new IT to meet the increasing quality demands of their customer airlines.”

Considering the particular requirements of the Middle Eastern and African markets, he opines: “There are always adjustments required for both regional and operation requirements but we do not see a big difference between the Middle East and North Africa – there is the same desire and drive to improve quality of performance and the efficiency of their operations.”

Montgomery adds: “We see the Middle East and Africa as important markets for Hermes. The successes of the recent implementations in both Abu Dhabi and Cairo have brought considerable interest from other companies within these regions. The two projects were different, one being a major hub implementation and the other a more standard GHA (ground handling agent), but both operations benefited from the wealth of functionality within the Hermes system despite being configured differently to handle specific operational requirements.”

Also last year, Qatar Airways designed and implemented a next-generation cargo management system – named CROAMIS – to manage its end-to-end airline cargo business processes. CROAMIS – Qatar Airways’ Cargo Reservations, Operations, Accounting and Management Information System – is a single system serving the airline’s entire global cargo network designed to scale with the anticipated future growth.

CROAMIS was developed in-house by the carrier through a co-funded model with global IT services provider Wipro. It is an integrated system that enables comprehensive automation of the airline’s core business functions and supports collaborative operations across the airline’s cargo supply chain. It provides an integrated revenue management module for inventory management, cargo load and revenue optimisation and also incorporates a cargo revenue accounting suite. It has been developed using platform-independent technologies, which facilitates modular deployment, and is also said to be ‘cloud-ready’.

Handling Africa’s challenges

There may be less money available in Africa’s air freight sector, but significant improvements to capacity and capability are nevertheless being made in many nations across the continent. But key to securing the required investment is economic stability.

Maarten Klijnstra, manager cargo services for Nigerian Aviation Handling Co (NAHCO), a handler headquartered at Lagos’ Murtala Muhammed International Airport that provides international cargo handling services at Abuja, Enugu, Kano, Lagos and Port Harcourt, notes that the nation’s economy has been “in flux” in recent times. A decline in the export of crude oil has negatively impacted the air freight market, he points out. Moreover, low oil prices have also hit foreign currency earnings and put pressure on Nigeria’s earnings.

The current conditions are tough and there is a need for NAHCO to adapt its operations to meet the challenges of an evolving air freight market, Klijnstra says. However, it’s by no means all bad news. Exports are expected to increase as they become cheaper in global markets. Nigeria’s horticultural sector is also regarded as an untapped source of air freight exports. The domestic market is massive, yet strategically produced horticultural products will do very well on foreign shores.

“Because of the air freight imbalance, export capacity is no problem and flights from Nigeria operate to all four corners of the globe,” he notes. “It is now up to the producers and marketers to do their thing. We are more than ready to handle this traffic,” he considers.

Compared to 2014, NAHCO handled 10% less tonnage last year. Cargo traffic from Asia was dominant, with four of the GCC (Gulf Co-operation Council) states’ national carriers operating to Nigerian airports. Ethiopian Airlines and Turkish Airlines have also grown their network capacity to Nigeria. However, freighter service frequencies have been reduced and maindeck capacity has been cut back, due to smaller freighters replacing B747Fs and belly cargo capacity on offer on B777 passenger aircraft providing sufficient lift to meet demand. Saudia Cargo, Allied Air/Astral Aviation and Cargolux continue to provide regular B747-400F capacity to the Nigerian market.

During 2015, NAHCO purchased new ground service equipment worth millions of dollars, while it is also currently working on the implementation of a new cargo system. By upgrading real-time data flows, a natural spin-off will be a vastly improved communication backbone with its airline and agent customers, Klijnstra argues. “The last thing airlines want is being let down by their ground handler, he notes, adding: “Carriers are segmenting their cargo product and vying for higher yields, shifting focus from ‘Flown as Booked’ to the ‘Delivered as Promised’, which justifies their drive for higher yields.”

Nigeria, an Economic Community of West African States (ECOWAS) member state, has the potential to establish itself as a regional cargo giant. While the country busies itself with a ‘life-after-oil’ economy, efficiency in air freight will contribute to eventual growth in the sector, Klijnstra argues.

But the air freight industry is evolving as Nigeria changes, he remarks. “Gone are the days of her guaranteed dependence on oil revenues. Companies will import more value-adding and manufacturing-related commodities by air and exports will rise as more goods are produced locally. The need for specialised cold storage facilities for imports and exports will further define Nigeria’s air freight market. Reductions in inventory lag will be key driver for air cargo imports.”

“Overcoming administrative and operational delays is the target. The market is in the process of discovering the interdependence between all role-players which will lead to further maturity,” Klijnstra concludes.

Sharjah upgrades cargo handling and cool chain systems
Sharjah Airport’s sole ground handling agent, Sharjah Aviation Services (SAS), is implementing a new-generation cargo management system that aims to provide real-time shipment information and dramatically improve cargo operations at the UAE airport compared with the current legacy system, when rolled out in May.

The state-of-the-art warehouse and cargo management suite ‘Cargo Flash nGen-CMS’ from Cargo Flash Infotech covers business areas including operations, warehouse, revenue accounting, staff rosters, workflow, and doors management. As well as supporting management and operations teams in running daily operations, it also aims to provide business intelligence and digital transparency to bring Sharjah and its air freight community closer to reaching its e-freight and operational quality goals, says Gonzalo Jacob, head of cargo at Sharjah Aviation Services.

Other highlights include the expected completion of the handler’s CEIV Pharma validation audit in March, after which it is expected to become the first airport facility in the Middle East to receive IATA’s certification for pharma handling standards. This follows the commissioning last November of a dedicated multi-zone healthcare storage facility and GDP-validated monitoring system and its purchase last December of a fleet of active cooling dollies. And in January, SAS began a truck replacement programme to make all trailers within its road feeder services be temperature controlled and monitored.

Meanwhile, following successful station and corporate audits last November, SAS in January also received its IATA Safety Audit for Ground Operations (ISAGO) accreditation.