Three years ago, pharmaceuticals accounted for a meager 0.5% of AirBridgeCargo’s total annual sales. Today, this specific special product contributes nearly five percent to the carrier’s revenues. A clear lesson learned from this development: ABC will take a U-turn in its product philosophy, concentrating primarily on transporting more prosperous high-yield shipments instead of putting general cargo up front.
This strategic shift comes in the midst of ABC’s network realignment, prompted by their consecutive cash checks month after month, revealing mounting financial problems from the end of last year
until recently. However, the carrier’s resurrection is well under way, as shown by steps such as flight cuts, network adjustments, ABC’s focus on special products, and the axing of overheads. It
is a concerted effort to get the ball rolling in the right direction again.
Network is being fine tuned
The former Munich B747F flights exemplify the changed route policy best. “We exited MUC because of the unbalanced loads. While exports ran well, we had only very limited import tonnage on board our freighters serving the city,” ABC VP Europe, Andrey Andreev explains. This was coupled with poorer rate levels making Munich flights financially less attractive, he says. Hence, bottom line, the route became increasingly unprofitable and was skipped. “We must take such decisions faster in future,” the manager recommends, “dumping old practices overboard.”
Instead, the MUC generated exports are meanwhile trucked to FRA where ABC offers the market 18 flights per week. However, that is seven down from the former 25 weekly services that were cancelled in reaction to general market contractions and lower volumes on transatlantic sectors. Hanoi, among others, was another destination taken off ABC’s itinerary.
As an additional business segment that promises good returns, the ABC manager intends to step up the transport of nutrition to the Far East, including livestock. In China, pork has quadrupled in price per kilogram in recent months. “That’s good money, and we intend to secure our share of this specific high-yield market,” states Mr Andreev. There, AirBridgeCargo serves six cities: Beijing, Hong Kong, Shanghai, Chengdu, Chongqing, and Zhengzhou. This is complemented by part or full charter services to destinations in Russia, located particularly in Siberia and the Pacific rim of the country.
Concentrating on profitable products
Pharmaceuticals, nutrition, livestock, express, all in combination with customer centric solutions provided to the global market, are an integral part of the new course set by the ABC managers. “We must further optimize our network and keep on concentrating on high-yield cargo!” Mr. Andreev recommends. “If a lane is not profitable, we should get rid of it much faster than in the past.”
Touching on the fleet issue – ABC ordered 29 Boeing 777 freighters – he would not exclude the delivery of the first three aircraft, scheduled to take place in the first three or four months of 2020, being delayed due to market weakness.
Ground services are the decisive performance element
And there is another aspect to becoming a differentiator, helping ABC to regain market shares and to attracting new customers at the same time: delivering excellent ground services. This will be the case in both Leipzig, Germany and Liege, Belgium. At these two airports, ABC has rented large warehouse capacities, based on ground handling agreements. “In addition to offering stable and punctual flights, we’ve got to deliver our customers first-class services on the ground,” the manager states.
Briefly touching on ABC’s parent company, Volga-Dnepr, Mr. Andreev stresses that the first six months of this year “were pretty tough.” Yet, business is nearly back to normal since last summer, compensating for the loss of the Ruslan SALIS contract, the former Strategic Airlift Solution: An agreement signed with NATO and EU and jointly operated until the end of 2017 by Russian carrier Volga-Dnepr and their Ukrainian counterpart Antonov Airlines, deploying large AN-124s.
“To my knowledge, Volga-Dnepr decided to step out of any military transports, be it for NATO or the Russian Army,” he said.
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