Record-Setting Emirates SkyCargo Adjusts to Economic Realities

 - November 21, 2011, 3:51 PM
One of three Boeing 777-200Fs helped Emirates SkyCargo carry 1.8 million metric tons of cargo last year.

Emirates SkyCargo set a company record this past summer when it carried 52.87 metric tons of freight in the belly hold of one of its Boeing 777-300ERs on a flight from Karachi to Dubai. Indeed, the load, consisting mainly of dense perishable meat products and vegetable produce, marked a significant achievement for Emirates during a period of sagging fortunes in the air cargo business. But more important for the Dubai-based carrier, it testified to the cargo-carrying capability of its -300ERs, more than 60 of which it flies virtually the world over.

“We, on the cargo side of the business, love [the 777-300ER] because with a full passenger load we can carry between 25 to 27 tons of cargo,” Pradeep Kumar, Emirates senior vice president of cargo revenue optimization and systems, told AIN

Alongside Emirates’ more-than-160-strong passenger fleet, Emirates SkyCargo flies three 777-200Fs and five Boeing 747-400 freighters, and plans to take another 777 by the end of this fiscal year, which ends next March 1, said Kumar. However, the airline seems to harbor little interest in adding new 747-8Fs to its 747 fleet. “We love the 777 freighter version as well as the passenger version, so I think that’s more of the direction we are going to take,” he explained. 

All told, Emirates SkyCargo can serve roughly half the world’s population within its four-to five-hour flying radius from its central vantage point in Dubai, said Kumar. Of course, Dubai’s many other benefits include a relative lack of bureaucracy, the emirate’s world-class seaport and the hub’s state-of-the-art infrastructure. “Dubai is a traditional trading port, and the economy is dependent on tourism and trade, so the government supports us in terms of traffic movement,” said Kumar. 

Last year Emirates SkyCargo’s 1.8 million tons of cargo generated $2.4 billion, or 17.4 percent of the airline’s total revenue—a particularly high percentage compared with most major international airlines, according to the Emirates cargo executive. Its largest market—the Asia-Pacific region, including India–generates some 58 percent of its total cargo revenue.

Of course, China, including Hong Kong, has become an ever more significant revenue generator, contributing 28 percent of the total, said Kumar, largely due to China’s tightening trade relationship with the various African nations. In fact, transshipments of heavy machinery, telecommunications equipment, mobile phones and household items via Dubai to points in Africa have increased at a time shipments to the rest of the world from Asia has declined.

“Basically, what is happening with the economic slow-down…the traffic flow from Asia, specifically southeast Asia, China and Japan is facing pressure,” said Kumar. “We are seeing a 6- to 7-percent decline of total exports from these points over the same time last year. [As a result,] the loads into Europe are at a low level. We are able to replace that shortfall by taking cargo to Africa, which doesn’t have any problems in terms of the economic slowdown. So they are importing a lot of stuff from Asia, and China is one of the major points from which we transport shipments into Africa.” 

Overall, as the cargo business enters its busy season, Kumar sees a flat to perhaps a 1 percent rise in revenue compared with last year, due to sagging economic conditions around the world. “Normally the last quarter of the year is the best for the cargo business,” he said. “But we see kind of a downturn in traffic flow, which we are monitoring on a daily basis.

“Last year at this time,” he continued, “we saw very attractive performance, but now, in line what the IATA said, the world economy is facing a lot of turmoil, and cargo is not immune to this situation. So at this point in time, we are at flat growth, without much momentum in terms of what we normally achieve at this time of the year.”