Rolling out its new strategy meant 2018 was the best year in Etihad Cargo’s history, according to managing director of cargo and logistics services, Abdulla Mohamed Shadid.
Speaking to Air Cargo Week at air cargo Europe on 5 June, Shadid explained that Etihad Cargo has been implementing initiatives including reorganising the fleet, network, its proposition, digital and physical infrastructure.
He says that all of these points helped Etihad Cargo close 2018 with its highest performance in the freighter fleet, profitability, aircraft utilisation and the mix of premium products.
“I think it’s fair to say that that’s closed the best year ever, which obviously is a tough benchmark.”
The fleet was transformed in 2018, with Shadid explaining that the airline asked what was its core fleet for the long term, resulting in the decision to remove the Airbus A330 Freighters from service and just focus on Boeing 777 Freighters. Etihad Cargo has five 777Fs.
Having looked at the fleet, the next area to look at was the network and how to leverage the freighter fleet with passenger aircraft. About 70% of Etihad’s cargo is transported in the belly of passenger aircraft.
Shadid says: “We’ve transformed the network. We went live with a new network in October last year, which focused on what we call core trade lanes. We had to define where we need to play, what’s Etihad’s strength.”
Being based in Abu Dhabi, Etihad Cargo is in the centre of the Asia-Europe corridor, and even covers Asia – USA trade lanes.
“We are right in the middle of that. That’s our core strength. We have a lot of shipments that come from the east, stop in Abu Dhabi and feed into our westbound aircraft and the other way round.”
Some routes were dropped while new ones were opened, which Shadid says was all part of the strategy. The focus was on key markets such as China, India and Vietnam.
Other bellyhold routes included Barcelona, Spain while Chinese routes have benefitted from the use of Boeing 787s.
Shadid comments: “With that, it’s resulted in ending the year with probably the best network performance we’ve had. Combined with the fourth quarter it was good timing.”
When looking at the commercial proposition, Shadid says it was important to integrate and get closer to the customer.
He says this is more than filling capacity, it is about joint partnerships and longer term planning. As part of this, Etihad Cargo launched a global customer programme last month and revamped the loyalty programme.
Shadid says: “These initiatives have helped gain trust in the customers to shift more of the work to us. With our slightly reduced capacity versus last year, we’re still able to see strong load factors.”
Premium products including pharmaceuticals and equine shipments were a major area of focus. Etihad Cargo was the first airline in the Middle East to be IATA CEIV Pharma certified, covering both the airline and the terminal.
Shadid believes this is a good example of Etihad Cargo’s commitment to upgrade physical infrastructure.
Refurbishment work should keep the infrastructure adequate for five to six years, but Shadid says Etihad Cargo is looking a long way into the future to secure long-term growth for Abu Dhabi.
He says: “We’re not going to wait until the 11th hour, we’ve already started working in parallel to plan the new home for Etihad Cargo, a state-of-the-art facility that should come online in the next three or four years. That will cater for growth for the next 50 years.”
The largest single area of investment is digital infrastructure. October last year was the cross-over from the old legacy system to IBS’s iCargo system.
Describing this as a “big leap”, Shadid says: “22% of our bookings are now online. We’re looking to digitise a large percentage through a direct system connectivity with our major customers. We’ve already done some successful pilots with DHL Express and Schenker using a freight forwarder messaging system to allow basic bookings from their own systems.”
The next step from not needing to call Etihad Cargo, send an email or log onto the customer portal is API to make a seamless connection between systems. Shadid says this would allow Etihad Cargo to digitise more than two-thirds of business.
“We will not look to invest heavily in new freighters and capacity, we can smartly grow our capacity. But what we will definitely invest in more and more is digitalisation. I think that’s an area where Etihad aspires to become one of the most digitised airlines.”
Shadid is satisfied that this will put Etihad Cargo in a strong position in the future.
He tells Air Cargo Week: “It is still a work in progress. A lot of it was accomplished in 2018 and I think it has set the foundations for 2019 where, when the market has slowed down and everyone is feeling the pinch, we’re not immune to that, but it’s positioned us to weather this, especially in the first quarter as we continue to roll out these important programmes. That’s part of the Etihad transformation. We’re looking to build a business that is sustainable in the long-term and not one that is there to take advantage of a peak or two.”