Following the initial opening speeches at TIACA’s Executive Summit, a fitting first panel set the foundation of the event by taking stock of the current state of the air cargo industry and discussing the outlook for the coming year. Moderated by the association’s Director General, Glyn Hughes, the panelists included a well-rounded cross-section of the industry’s key players: Wilson Kwong - CEO of HACTL, Geert Aaerts – Chief Cargo & Real Estate Office, Brussels Airport Company, Turhan Özen – Chief Cargo Officer, Turkish Airlines, Yossi Shoukroun – CEO of Challenge Group, and Marco Tafuro – Air Freight Director, UPS Europe Region.
The consensus was very clear: 2023 had and was continuing to present a series of challenges, but also brought to light significant opportunities for growth and adaptation. Yossi Shoukroun highlighted the year's rocky start, pointing out that 2023 was a year of transition marked by the global recovery from the COVID-19 pandemic. Passengers returned to the skies, bringing belly capacities, while costs surged, impacting profitability. Nevertheless, Challenge Group was fortunate to retain the trust of its customers as it continued to provide a reliable supply chain. With the unforeseen, recent developments in Israel, however, the group is again faced with rising yields and “a situation where it is hard to go back to normal."
Responding to crisis
Whilst Israel currently faces political unrest, Türkiye had to deal with unexpected, devastating natural disasters at the start of the year when earthquakes hit the country on 06FEB23. From that moment on and until early MAY23, Turkish Airlines deployed almost half of its freighter fleet to support earthquake victims with seamless material flow. Turhan Özen emphasized the excellent collaboration in the air cargo community coming together in possibly the largest scale support to date. “By MAY23, we were able to concentrate on the [cargo] market and realized it wasn’t going very well,” he continued, stating a 12% decrease in chargeable weight, and a 35% drop in rates since capacity was higher than 2019 levels, but offered mainly as belly space. Nevertheless, he was the most optimistic of the panelists, being of the opinion that the next 6-12 months would remain difficult, but the industry could look to better times from the second half of next year.
e-commerce and investments
Tonnage/volume drops over the year were also reported by HACTL (1.3% drop for HKG airport, JAN-SEP23), and Brussels Airport (-4% year-to-date drop in numbers). Whilst Wilson Kwong reported a surge in e-commerce activity in recent weeks, is firmly convinced that “this time round, the [seasonal] peak is certainly happening!” and optimistic about medium and long-term prospects, Geert Aerts underlined the importance to forging ahead in times of challenge: “Our strategy, focusing on niche markets, community, digitalization, and accelerating sustainability, is paying off. We are weathering the storm, which is a cyclical event, continuing to invest in our Roadmap plans in preparation for the upcycle, too.” A point that was echoed by Marco Tafuro: “It is a challenging year, but still, if we learnt a lot during 2023, it is to continue to focus on improving, innovating and dealing with challenges to deliver value to customers.” That value to customers is achieved by listening to their requirements, Hughes stated. Shoukroun illustrated the uncertainty in the never-ending changing world, and summarized that, in the face of all that was going on, “customers are looking for certainty – reliable and efficient supply chains.” This required intelligent fleet scheduling as well as building solid networks together with quality partners.
A growing shift towards Sustainability
Glyn Hughes addressed the topic of sustainability since this is a growing decision factor for young people choosing where to work. Geert Aerts lamented the lack of awareness of the general public as to the enormous societal impact that the air cargo industry brings to economies and society, and underlined that “collaboration between all parties is the only way to tackle the challenges we face, going forward”. To that end, he announced a brand-new, first time initiative: “Together with Air Cargo Belgium and TIACA, we [Brussels Airport] will launch world-first TIACA BlueSky Community Program. We will support members to do the BlueSky assessment and reconcile all inputs into a common goal to collectively work on challenges. This is an important next step!”
Adapting to workforce changes
After discussing various commodity developments in e-commerce and healthcare, along with the logistical challenges, risks, and opportunities posed by these, the panel then addressed the evolving nature of the workforce. Wilson Kwong shared insights from HACTL's experience, noting that while they managed to retain their workforce during the pandemic, changing demographics pose a new challenge. As an aging workforce approaches retirement, the industry must find innovative ways to attract and retain younger talent. Automation, Kwong explained, is one avenue, but the nature of the industry still necessitates human involvement.
Looking ahead to 2024
The outlook for 2024 was a mix of cautious optimism, realistic assessments, and incredible plans. Turhan Özen, whose airline is looking to practically double its passenger fleet to 800 in the next 10 years, and increase its number of freighters (mix of own and leased) from 24 to 40 within the next five years, highlighted the importance of monitoring demand and sales ratios to pick up on trends, pointing out that – if not impacted by geo-political circumstances – “I am optimistic that by latest Q4/24, demand will start to pick-up. Air cargo will be the first to react very positively to economic upturn – no later than SEP next year.”
Wilson Kwong said: “2024 will see the full opening of a free runway system in HKG. We will see a lot of volatility, but also small growth compared to 2023.” Tafuro shared a similar view, since some verticals showed good expectations for growth, but also expected challenges for the first half for 2024. Aerts pointed out “Last year, we all had our hopes up that 2023 will be better”, and was more cautious regarding 2024, given the threat of war expanding in the Middle East: “At best, we will remain flat [regarding growth], maybe a little bit up. U.S. is a strong economy – this might be good sign. Perhaps recalibrate estimates at end of this year,” he suggested.
Planet to Planet!
Shoukroun’s outlook, too, was similar to Aerts’: “2024, in terms of global economy and geopolitical situations, will not change. The signs are not good, and the impact is that fuel costs will increase.” He predicted fewer passengers in 2024, “so cargo operators will benefit.” One outcome of the pandemic, however, was that “production origins are now moving,” hence cargo networks would need to adapt. What was previously mostly made in China, was now being split across Southeast Asia and Africa. Plus, China was starting to consume as well as export, “so there are new challenges in ecommerce. Instead of China-to-Global, we are now looking at Global-to-Global.”
Hughes could not resist looking even further forward, “And from G2G, we move to P2P - Planetary to planetary!”, he joked, bringing the first TIACA Executive Summit panel to a successful close.
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