FROM MAGAZINE: Cathay Pacific gears up for further growth

Cathay Pacific has made the right moves in terms of its investments over the years and has been instrumental in developing Hong Kong as one of the world’s leading global transportation hubs.

Surya Kannoth

What Roy C Farrell and his Australian partner Sydney H de Kantzow foresaw 70 years ago is something that nobody had ever imagined. Sensing the potential trading opportunity with China following the aftermath of World War II, they purchased a US Army surplus Douglas Dakota DC-3, called “Betsy”, which became the first plane in Cathay’s fleetfor US $30,000, which was later converted to civilian use, packed it full of goods from the United States, and flew off to Shanghai. This laid the origins of Cathay Pacific Airways, which started a small regional freighter to now becoming one of the world’s leading international air cargo carriers.

Cathay Pacific’s cargo business currently accounts for around 24 per cent of its annual revenues, and has helped to build Hong Kong into the world’s busiest air cargo hub. All of Cathay Pacific’s cargo operations are grouped under its Cathay Pacific Cargo unit.

With a current fleet of 21 Boeing 747 freighters, Cathay currently flies to 45 destinations around the world. It also utilises cargo space on Cathay Pacific’s 122 passenger aircraft. The cargo unit carries more than 120,000 tonnes of cargo per month, more than half of which is uplifted on passenger flights.

When it comes to India operations, Cathay flies 25 freighters per week. “The market in India is growing. We see a range of electronics, project shipments etc being transported. The frequency of freighters we have in India, which is 25 per week as compared to 7 a week to Europe just shows how important India is now for the air cargo market and to Cathay,” says Mark Sutch, general manager cargo sales & marketing, Cathay Pacific Cargo.

Sutch remains optimistic about the growth of the air cargo market in Asia. “The Asian market is a very mature market particularly in Hong Kong. We are seeing annual growth of 1-2 per cent which is encouraging. If we look more specifically beyond Asia, and at India, I think growth is much bigger. Year-to-date, January-September, Cathay has already had 8 per cent tonnage growth out of India. If you look at the first quarter this year, we have seen significant growth of 27 percent.”

For Cathay, exports from Europe, Asia and Mainland China have seen good growth, while demand for freight on North American routes has been robust. “The last week of the month (September), prior to the long national holiday in Mainland China, saw us break the company’s weekly uplift tonnage record. Although yield is down from the same period in 2015, we plan to maximise our freighter schedule over the last quarter as we expect demand to strengthen during the traditional peak season,” he added.

KEY HIGHLIGHTS OF 2016 CARGO BUSINESS FOR INDIAN MARKET

• Tonnage for Q1: 16,325 tonnes
• Tonnage for Q2: 15,577 tonnes
• Tonnage for Q3: 13,932 tonnes
• Growth in comparison to 2015 : Tonnage growth YTD (Sep’16) is 8 percent
• Q1 increase in tonnage versus 2015: 27 percent
• Pharmaceuticals remains key focus
• India market for Cathay Pacific’s Pharma LIFT has grown by almost 159 percent in tonnage as compared to last year

State-of-the-art cargo terminal
Cathay Pacific has made substantial investments to develop Hong Kong as one of the world’s leading global transportation hubs. The HK$5.9 billion Cathay Pacific Cargo Terminal is one of the biggest and most sophisticated terminals in the world, providing additional air cargo handling capacity and facilities that will help to further reinforce Hong Kong’s position as the world’s premier international airfreight hub.

The airline’s wholly owned subsidiary, Cathay Pacific Services (CPSL), was awarded a franchise to invest in, design, construct and operate the new air cargo terminal at HKIA under a 20-year agreement. The new terminal has been designed for an annual air cargo throughput capacity of 2.6 million tonnes and will be a common-use facility open to all airline customers.

Air Asia, Air Hong Kong, ANA Airlines, China Eastern, China Cargo Airlines, Eva Air Cargo, Lufthansa Cargo, Raya Airways, Royal Brunei and Shanghai Airlines are some of its customers.

The terminal, which spans 246,000 sq m in terms of gross floor area, operates with three key features: Just-in-Time operations, information-driven operations; and enhanced transhipment capability.

Using the Just-in-time philosophy, the waiting and processing time for cargo handling has been reduced considerably. Usage of iPass, RFID tagging and a truck control system help optimise traffic within the terminal. The terminal is also equipped with extensive wireless network coverage, supporting real-time barcode data update to facilitate proactive monitoring of all cargo activities within the terminal. This enables cargo status to be tracked and traced efficiently. The terminal has enhanced it transhipment capability with a dedicated zone for the handling of transhipment operations. This helps in reducing the minimum connection time for transhipment from eight hours to five hours, and even three hours under prior arrangement.

The terminal also has a comprehensive security management system in place to ensure the movement of all cargoes at the terminal is well governed and protected. Over 1,000 closed-circuit television cameras are positioned in key locations to monitor activities inside and outside the terminal.

The Cathay Pacific Cargo Terminal sets new standards in operational efficiency, environmental design and service levels. The cargo terminal is capable of handling anannual throughput of 2.6 million tonnes, increasing Hong Kong’s air cargo capacity by 50 percent to 7.4 million tonnes per year and enhances the city’s competitiveness as the logistics hub of choice in Asia.

The terminal incorporates innovative features and advanced technologiesto enhance the visibility, efficiency and reliability of each step of operationsat CPCT, improving customer experience and creating added value to support their business growth.

As Hong Kong’s premium airline, Cathay Pacific has a unique role in bringing together business people in East and West, enabling exchange of goods, services, capital, talent, skills and ideas. In other words -enabling great business. ?