Icelandair Cargo recovering after fishing strike hits business

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A fishing strike in Iceland in the first two months of 2017 hit seafood exports at Icelandair Cargo and the carrier is still recovering.

Fisherman stayed on land after a disagreement with trawler owners over wages and industry taxes.

Exports of seafood were affected and as the sector makes up most of its outgoing traffic for Icelandair, it has been playing catch-up ever since.

Managing director, Gunnar Már Sigurfinnsson (pictured) says the strike had a big impact. “As the strike was for 10 weeks, the Icelandic fish industry lost market share to some competitors so we are still not fully recovered because of that.

“On the other hand imports have been increasing a lot as well as transit, so we have seen acceptable results despite the fisherman strike,” he says.

Gunnar Már Sigurfinnsson Icelandair cargo

Icelandair has added widebody capacity, which has opened up more opportunities to trade lanes that were not previously on the radar.

“Widebody aircraft allow us to offer service on trade lanes where we were not competitive before. We connect some range of destinations with widebody capacity today both in Europe and North America,” Már Sigurfinnsson says.

He notes imports have been increasing considerably since 2016 and it is seeing strong growth in first half of 2017 as surging passenger numbers to Iceland drives demand for perishables, while the strong Icelandic Krona is also boosting imports.

Seafood is the most important sector and Már Sigurfinnsson is optimistic it will gain back part of what it lost in the strike. He says: “We do have more uncaught quota left than usually at this time of the year, meaning that the fish industry can supply all markets better this summer than the summers before.”

Icelandair operates two Boeing 757 Freighters, and the load factor suffered in the first weeks of the year on the exports side due to the strike, but the import load factor performed well.

Már Sigurfinnsson was disappointed there was such a long strike, but results were “acceptable” considering the load factor on freighters was less than it planned, but the load factor is better than it should expect after at the first two quarters of 2017.

Belly routes are becoming more and more important as Már Sigurfinnsson says it now has B767-300 aircraft instead of only B757 aircraft. More than half of the cargo Icelandair moves is in bellies and the B767 is a key pillar of growth plans.

“This is a big change for us and allows us to offer much better service for our clients on key routes like London, New York, Boston, Amsterdam and Frankfurt to mention some,” he says.

Már Sigurfinnsson adds: “We are constantly increasing the volume in the belly and we will continue to do so, as the product is very good and interesting for our clients.”

No more freighters are planned, but it has upped freighter capacity to Europe and on the belly side it has been adding B767 aircraft to its fleet. The emphasis is now on utilising that capacity. “This capacity is flying anyway in our network and fitting well to the main trade lanes we have for Iceland,” he says.

Icelandair is also working on various enhancement projects and Már Sigurfinnsson says cool chain facilities is a focus to make sure it has the best service for perishables as possible.

“We are working on real-time loggers that will help us to follow shipments and then the network for freight is always increasing with more widebody capacity. We have a team working on a digital concept to mention some,” he says.

Már Sigurfinnsson says future investment will centre on a structure to help modernise operations, to fulfill expectations of future customers, used to paperless and high-tech business solutions. He believes this is crucial for Icelandair to be competitive and to meet the needs of customers in the years ahead.

Icelandair has also become a trustee member of TIACA. Már Sigurfinnsson feels it is a good platform to connect different air cargo stakeholders. He says: “In organisations belonging to our industry usually the bigger stakeholders are getting more attention. SME companies are running very successful businesses and do sometimes do things in a different way than the bigger ones.

“We hope to have an opportunity to be active part of the organization, both learning from others and have a voice that might support the development of the industry.”

The biggest opportunity he believes is that the future generation is very demanding and everything is about time and speed.

“Airfreight has a great opportunity to be part of this business model if we do things properly. That means on the other hand we have to modernise our operations, both considering technique and environmental issues. This will be a big challenge, but I believe we have everything to do it successfully if we want to,” Már Sigurfinnsson says.