How do you see the post-pandemic market behaving this year?
This year is starting off the back of a very strong 2022 in terms of results, but I think we all understand that we’re moving into a moderating period as supply and demand starts to readjust after the pandemic.
There are some still some economic headwinds in the main markets we serve – Europe, Australia, the US and the Chinese Mainland. To begin with, the supply-and-demand equation will lead to a dampening in our revenues, but the most-affected markets will start to work their way through their problems. We’ve already seen the opening of the Chinese Mainland to the world again for trade and travel, which is very encouraging.
Even in this transition period, there will be strong pockets of opportunity – a weak market is not always weak everywhere at the same time. These opportunities will be around express and e-commerce cargoes, and other time- and temperature-sensitive shipments that require special handling and with which we have built a track record of expertise around the world.
As the passenger network is restored, more belly capacity will return. What effect will this have?
There’s no doubt that more passenger flights will lead to increased capacity and therefore some pressure on yields. But then some of these markets have been very under-served by wide-body carriers, so there will be opportunities for increased tonnage. Our network returning will allow us to gain back some market share, particularly around the Greater Bay Area, and on to long-haul markets like the US and Australia. We hope to increase our tonnages quite significantly, so it’s by no means all negative.
As we rebuild, our operations teams continue to work hard to ensure that each port has a safe and efficient relaunch plan. We remain very focused on the safety of the cargo we carry, as well as the people who fly and handle it.
How do you see the balance between air and ocean cargo?
The boom years we had in air cargo because of supply chain issues and challenges to ocean shipping are behind us. Air cargo that would otherwise have gone by sea will revert back, and rates are beginning to normalise. But there is still cargo that needs to travel by air, and that will be our focus. Yields also remain elevated on many of our air cargo trade lanes from the immediate pre-COVID period.
What are your plans, and what opportunities do you see, for 2023?
We’ll continue improving our cold chain offerings, which started with the refreshed Cathay Pharma solution late last year, and by looking at our Fresh LIFT solution this year. We are also relaunching our regular and express mail solutions, which will appeal to post offices globally. We will also improve our dangerous goods solution for customers, and we’re applying for IATA’s CEIV Lithium Battery accreditation. This will allow us to continue developing our expertise in this area.
Other things to note are that the restrictions on transiting live animals through Hong Kong have been lifted, and we’re also working hard with the authorities to be able to carry e-cigarettes again from Hong Kong. Our home hub has tremendous infrastructure for air cargo and we intend to remind the industry of this as we rebuild our global status.
We also know sustainability is incredibly important to many of our customers, so we are looking at increasing the adoption of carbon offsets, further reducing waste across our land-based operations, as well as introducing more freight forwarder and shipper partners into the Corporate SAF Programme.
How is the digital transformation going?
We didn’t sit on our hands during the pandemic; we kept going with our transformation programme and some of that work will bear fruit with benefits for both our customers and our own people. Notably this year, we will introduce improved processes around claims management approvals for types of unusual shipments and launch a frontline mobile app containing all the information needed for our people to more efficiently deliver consistent expert handling.
We’re looking at integrating with some of our freight forwarders and cargo warehouses to get better shipment information based around Cargo iQ, and linking that to our own systems. On the distribution side, we continue to expand our online booking capabilities with enhancements to Click & Ship and linking to customers’ own systems through direct API connections. We will also be introducing a series of data-driven sales tools to allow our sales teams to operate more effectively in their markets, as well as understanding our customers’ needs better.
Last year, you identified six focus areas for the business as part of the brand vision. What are the updates on those?
The first one is around our Hong Kong hub and the Greater Bay Area. We’re looking to rebuild our market share in the GBA as capacity returns, and we’ve established a stronger sales presence over the past 12 months so we can focus on inbound as well as outbound cargo. Volumes will be boosted by the opening of Hong Kong International Airport’s intermodal handling facility at its Logistics Park in Dongguan. We’re leading the way, working the Airport Authority in Hong Kong, to open and operate that sea-to-air link early this year, which is very exciting. In the longer term, HKIA’s new third runway opened last year, which will enable true three-runway operations from 2025.
In terms of our brand and marketing strength, we are relaunching our brand this year to raise visibility about our capabilities. The first step will be a new-look website, which we hope customers will find more intuitive – and we’ll keep adding new applications that are directly relevant to our customers. Essentially, we’re aiming for a one-stop shop with booking and servicing capabilities. On the marketing side, we’ll target certain areas of the industry for promotional campaigns, particularly pharmaceuticals and electronics. We will ensure our global teams rebuild our operations and network with the goal of becoming the world’s most customer-centric air cargo service brand.
For customer solutions and service excellence, in addition to relaunching the solutions mentioned above we are also looking at developing an express product that will enhance our ability to move small shipments around the world. We are continuing to grow our e-commerce tonnages with global industry players who will benefit from Hong Kong’s infrastructure and logistical e-commerce capabilities. We are also introducing more data-rich dashboards to help us make better internal decisions around solution development, priorities and investments.
In terms of future fleet and network, we’re continuing to evaluate opportunities for mainline freighter growth in the decade ahead to grow our network reach, capacity, and ensure future relevance to our Hong Kong and global customers. The immediate focus on network will be in restoring our existing one, which will increase the cargo uplift on key trade lanes to and through Hong Kong. We intend to return to more than 80 per cent of our pre-COVID capacity by the end of this year.
There are big things coming in digitalisation and automation. We are continuing to roll out dashboards using information from our integrated operational data warehouse. These intelligent tools provide critical insight and enable us to deliver better business decisions and services using real customer data. There are also major projects around delivering the technology of Salesforce automation, web-based checklists and digitalised processes, and we are automating case management around cargo claims and various shipment approval processes among several other significant initiatives.
What can customers look forward to this year?
One of the big things will be seeing us! Commercial teams are already out and about visiting places we haven’t been able to get to for a long time. We’re also planning to be at various events around the world, including the CNS (Cargo Network Services) Partnership Conference, the World Cargo Symposium, various regional forums and we’ll be participating fully in the Hong Kong logistics industry as a driving force behind rebuilding the Hong Kong Hub after the past few extremely challenging years. Hong Kong is going to be well and truly back again as the giant on the air cargo logistics stage!
What is your message to customers as the year starts?
I’d like to thank them for sticking by us during the past operationally challenging and unprecedented times we have faced as both an airline group and specifically as an air cargo carrier based in Hong Kong. We are continuing to make significant investments to further improve improve our capabilities and service levels and we’re doing our utmost to make it easy for our customers to choose us – because they know that with us, every shipment matters.
I want them to see that we do put our customers at the centre of what we do and have the expertise and know-how to meet their air cargo needs. We have a deeply held ambition to become the world’s greatest customer-centric air cargo service brand, and we are well on the way to achieving this. That vision drives our teams of dedicated professionals across the network, so that we in turn can help our customers to grow their businesses as we transport the air cargo that matters to the world.