In the next instalment of our senior executive interview series, Stanislas Brun, vice president of cargo at Etihad Cargo, shares insights into the carrier’s investment plans, including fleet expansion and digitalisation, to meet future demands.
How are global economic conditions affecting the air cargo industry, and what implications does this have for Etihad Cargo?
Etihad Cargo is seeing a busier peak season this year, with current volumes already surpassing last year’s due to disruptions in global supply chains and various external factors affecting end-of-year demand.
Demand is strong, mainly driven by e-commerce, which is taking up more space on planes. We also see increased shipments of perishables, food, flowers, meats, and pharmaceuticals.
Disruptions like the situation in the Red Sea have pushed some shipments from ocean to air freight, and recent US tariffs on Chinese electric cars have further increased air freight demand due to a lack of container capacity.
Furthermore, there is more demand for shipping high-tech products and e-commerce out of China, Hong Kong and Vietnam. For example, e-commerce accounts for more than 27% of air cargo currently.
For Etihad Cargo, this presents a huge opportunity to provide tailor-made solutions to our different types of customers.
In a highly competitive market, what differentiates Etihad Cargo from other major players in the industry?
Etihad Cargo differentiates itself by focusing on customer expectations and needs, driving us to continuously find new solutions. One key approach is our flexibility in operations; for example, due to the higher demand from Asia to Europe, we adjusted our freighter flights by stopping some transatlantic routes to increase capacity between Asia and Europe.
We also enhance our capacity through interline agreements with different carriers globally, ensuring we can meet customer demand wherever it arises.
A prime example of our innovative solutions is our partnership with Teleport, which boosts cargo capacity and frequency between Southeast Asia and the Middle East. This partnership leverages both networks to meet growing trade needs, transporting essential goods like machines, raw materials, phones, and chip sets from Ho Chi Minh to Kuala Lumpur, and onward to Abu Dhabi and beyond via our hub.
Customers appreciate Etihad Cargo for our tailor-made solutions, which are designed to meet their specific needs efficiently and effectively. This focus on adaptability and customer-centric strategies sets us apart from other major players in the industry.
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What major trends do you foresee impacting the air cargo industry in the next five to 10 years?
The evolution of e-commerce observed in the past five years is set to continue, with projections indicating it will make up 30% of all air cargo in the next one to two years and sustained expansion over the next seven to 10 years. This continued growth will drive demand for air cargo as consumers increasingly rely on quick delivery times.
Additionally, the high demand for specific perishable products, particularly food, will ensure that perishable cargo remains a significant component of air freight. Consumers’ growing preference for fresh and exotic food items will keep this segment robust. Furthermore, the pharmaceutical sector will continue to be a major trend, driven by the development of new drugs and medicines. Ongoing research and innovation in pharmaceuticals will require reliable and fast transportation, ensuring that this segment remains a key part of the air cargo industry.
How is Etihad Cargo leveraging advancements in digitalisation to optimise operations and drive efficiency?
By integrating digital solutions, we connect directly with the ERP systems of freight forwarders, enabling real-time access to all operational messages regarding their shipments. This connectivity allows us to provide customised commercial propositions tailored to their specific needs.
Furthermore, we are utilising artificial intelligence (AI) to enhance the quality and performance of our handling processes worldwide. We are working on several projects with partners to develop solutions for automatically measuring dimensions and prioritising shipments. However, for these solutions to generate real value for the supply chain, handlers need to integrate them into their facilities. This collaborative approach ensures that digital advancements lead to tangible improvements in efficiency and service quality for our customers.
What are the main goals of Etihad Cargo for the remainder of 2024?
For the remainder of 2024, Etihad Cargo’s primary goal is to enhance our customer relationships and partnerships by providing customised and reliable service. We anticipate a significant push in demand during the second half of the year, which necessitates an increase in capacity. Currently, our load factor exceeds 90%, so it is crucial to optimise every available cubic metre of our aircraft to meet this demand efficiently.
Our focus remains on enhancing our product and customer strategies to guide our business effectively. We aim to maintain high-quality service delivery and ensure that we keep our promises to customers. This involves prioritising operational efficiency and quality, ensuring that we make the most of our available capacity while continuously improving our service standards.
By concentrating on these aspects, we strive to meet and exceed our customers’ expectations, thereby solidifying our position in the market as the air cargo partner of choice. All our efforts are centred around delivering exceptional service and building strong, lasting partnerships with our customers.
What are the key areas of investment for Etihad Cargo over the next few years?
A major commitment for us is the confirmed order of seven A350 freighters, scheduled for delivery starting at the end of 2026. This fleet expansion represents a substantial investment aimed at enhancing cargo capacity and efficiency.
In addition to fleet upgrades, Etihad Cargo is heavily investing in digitalisation and IT system improvements. These include developing a robust platform for seamless API connections with forwarders, maintaining these connections, and creating a new revenue management system.
Furthermore, Etihad Cargo is working on the development of specific tracking products to meet customer expectations.
An indirect yet significant investment is the construction of the new East Midfield Cargo Terminal (EMCT) at Abu Dhabi Airport Free Zone’s East Midfield District. This state-of-the-art cargo facility will support Etihad Cargo’s operations and further boost our logistical capabilities.
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With a global surge in e-commerce over recent years, how has Etihad Cargo adapted its operations to meet the increased demand for fast and reliable shipping?
With the global surge in e-commerce, now accounting for over 27% of cargo flying worldwide, Etihad Cargo has strategically adapted its operations to meet the increased demand for fast and reliable shipping.
Leveraging our strategic base in Abu Dhabi, Etihad Cargo is well-positioned to provide services that cater to the specific needs of the e-commerce sector. A key component of this adaptation is our partnership with SF Airlines, which has proven to be a significant asset. This collaboration not only enhances operational efficiency but also generates substantial benefits for both airlines and our partners. By continuing to develop this partnership, Etihad Cargo ensures it remains a pivotal player in the rapidly evolving e-commerce landscape.
How are customer expectations changing, and what steps is Etihad Cargo taking to meet and exceed these expectations?
In today’s unpredictable world, forwarders and shippers are increasingly seeking reliable partnerships to ensure their shipments are delivered on time. To meet these evolving customer expectations, Etihad Cargo is committed to maintaining exceptional on-time performance.
Our extensive freighter and passenger network growth allows us to offer a wide range of solutions to meet diverse shipping needs.
For example, the pharmaceutical sector demands stringent temperature control, which is why Abu Dhabi Airport is now equipped with cool dollies to ensure the safe transit of these sensitive goods. In the pharmaceutical sector, we continue to develop pharma corridors to and from Abu Dhabi, in partnership with Abu Dhabi’s Department of Health and Abu Dhabi Airports. This aligns with our commitment to supporting Abu Dhabi’s vision to become a global hub for healthcare and life sciences.
Additionally, recognising the importance of food and perishables, Abu Dhabi is developing a dedicated food hub for the region. Etihad Cargo, in partnership with Abu Dhabi Airports and the Abu Dhabi Food Hub – KEZAD, has signed a tri-party memorandum of understanding (MoU) to establish the ‘Fresh Corridor 2.0’, a fully compliant and transparent perishable air corridor. This initiative aims to diversify food sources, develop new trade corridors, and enhance the variety of products available to regional consumers.
Can you discuss Etihad Cargo’s efforts towards sustainability and how you are addressing environmental concerns within the industry?
In line with Abu Dhabi Environment Vision 2030 and IATA industry targets, Etihad Cargo is committed to achieving our goal of net zero carbon emissions by 2050 and is developing and adopting sustainable practices across our operations.
Our approach includes a mid-term strategy of renewing our fleet with aircraft that feature lighter structures and more fuel-efficient engines, which significantly reduces our carbon footprint.
Etihad Cargo prides itself on having one of the youngest fleets in the industry, reflecting our commitment to sustainability.
In the short-term, we have made considerable strides in reducing plastic waste by eliminating 41 single-use plastic items by 2020, preventing 17 tonnes of waste from reaching landfills.
Following the introduction of our enhanced Economy experience, we’ve achieved an 80% reduction in single-use plastics, removing nearly 100 plastic items from our aircraft.
What are the key regulatory challenges facing the air cargo industry today, and how is Etihad Cargo navigating these complexities?
One of the key regulatory challenges facing the air cargo industry today is the increasing utilisation of lithium batteries, which has led to the introduction of new regulations due to the instability of certain types of these batteries. In response, Etihad Cargo has developed a specific product, SecureTech, to ensure that high-tech devices containing lithium batteries are transported safely from origin to destination.
Additionally, for isolated lithium batteries or those being returned to the factory, we are working on developing a specialised product to address these needs. We are committed to providing a safe and reliable solution for the transportation of lithium batteries, ensuring compliance with the latest regulatory requirements and maintaining the highest safety standards.
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How have recent global supply chain disruptions impacted Etihad Cargo operations, and what measures are you taking to mitigate these challenges?
Recent global supply chain disruptions have impacted Etihad Cargo’s operations, leading to a busier peak season with volumes already surpassing last year’s.
Geopolitical tensions and non-overfly challenges have extended flight times and affected routes from Asia to Europe.
Strong demand, primarily driven by e-commerce, along with increased volumes of perishables, food, flowers, meats, and pharmaceuticals, is straining capacity.
The Red Sea disruptions have further shifted volumes from ocean to air freight, compounded by new tariffs on Chinese electric cars in the US and the absence of trains between Asia and Europe.
To mitigate these challenges, Etihad Cargo is working closely with partners and interline agreements to ensure sufficient capacity, exploring all options for additional capacity.
We are also focusing on digitalisation to enhance operational efficiency and flexibility, maintaining a high load factor and service quality amidst the busy peak season.
What are some of the biggest challenges you personally face as a leader in the air cargo industry, and how do you address them?
One of the biggest challenges I face is navigating the numerous geopolitical incidents that have arisen since the Covid-19 pandemic. These incidents underscore the critical importance and legitimacy of the air cargo industry within the global logistics chain.
To address these challenges, Etihad Cargo emphasises agility and a customer-centric approach. By remaining flexible and responsive to the rapidly changing geopolitical landscape, we can continue to meet our customers’ needs and maintain reliable service.
Our focus on understanding and prioritising customer requirements ensures that we can adapt our operations to overcome these disruptions effectively.
Reflecting on your role as a senior executive at Etihad Cargo, what significant lessons have you learned about your organisation, and of the dynamics of the air cargo industry?
I’ve learned that the air cargo industry is incredibly dynamic, characterised by steep peaks and deep drops. This volatility requires agility and a lean operational approach to navigate effectively.
The ability to make quick and efficient decisions, such as changing networks, destinations, or aircraft types, is essential.
At Etihad Cargo, we focus on maintaining this agility and decisiveness at the forefront of our strategy. By keeping these principles central to our operations, we can manoeuvre through challenges and consistently find effective solutions, ensuring we remain resilient and responsive in a rapidly changing industry.
Where do you see the biggest opportunities for growth in the air cargo sector, and how is Etihad Cargo positioned to capitalise on these opportunities?
In the next five years, the biggest opportunities for growth in the air cargo sector will likely come from the continued expansion of e-commerce, along with specific commodities such as pharmaceuticals and perishables.
One of the most challenging aspects will be balancing the flows between eastern origins and the rest of the world, as well as managing the return routes.
Etihad Cargo is well-positioned to capitalise on these opportunities through our agile and responsive approach. By leveraging our salesforce to generate new opportunities, we aim to balance these flows effectively.
This balance will not only optimise our operations but also enhance our capacity to meet the increasing demand for e-commerce and specialised commodities.
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