By Staff writer
Having recently introduced regional management to the Middle East, Cargolux is preparing for regional growth by targeting a variety of niche markets, including the lucrative perishables and livestock sectors.
Cargolux may have first entered the air cargo industry over 35 years ago, but it was only recently that management of its global territories was localised. As the number of its operations in the Middle East continued to increase, the company realised the need for a clearer focus on the region.
"Management has decided to make this a region of its own because of its growing importance," says Albert Pansin, regional director Middle East and Africa. "You cannot control this region out of Europe, you need to have an office set up here. I think we can do much more now and we have some new projects planned for the new year."
Before the move, Cargolux had never served flights on a regular charter basis to the Middle East. During the nineties, the company invested in its first fleet of Boeing 747-400F freighter aircraft, which began the first significant activity in the region, namely to Dubai and Abu Dhabi.
Around 25 years ago, Dubai became the location of Cargolux's first station in the Middle East, and so it is fitting the emirate is now also home to its regional headquarters. With offices also in Sharjah and Abu Dhabi, Cargolux has an extensive network that spreads all the way across to East and South Africa.
The position of the Middle East between Europe and the Far East has, of course, always proved a valuable refueling point for air cargo companies, but Pansin believes this is changing. "The Middle East is definitely showing more and more potential, the bulk of the cargo is actually coming here, rather than just stopping off before going to Hong Kong like in the past," he says. "The growth in the region is phenomenal so the aim is to sell capacity here, and then whatever is left we sell to the Far East; mainly Hong Kong, Singapore and Shanghai."
There are currently two flights a week from Luxembourg, home to Cargolux's global headquarters in the Grand Duchy, solely to the Middle East and back again. Destinations Cargolux serves in the region include Dubai, Sharjah, Abu Dhabi, Kuwait, Beirut, Damascus, Qatar, Jordan and Lebanon. Most of the imports moved to these locations consist of consumer goods or oil loading devices and equipment.
A great deal of the manufacturing that takes place in Sharjah and Jebel Ali is likewise exported back to Europe and also to the United States. Pakistan is also a key export site, and Pansin believes half of the production Cargolux takes from Pakistan goes directly to the US; either to the east coast, such as New York and Chicago, or to the west coast, such as San Francisco and Los Angeles.
As impressive as this scope sounds, Pansin admits that a certain level of adaptation has been required for the move towards regional management. "There has been some fine tuning, and we have been looking at new opportunities and new destinations. You will see the progress, as our plans develop in the new year. We hope to expand."
Although unwilling to reveal details of future plans, he hints at the importance of Africa in the future, in particular Kenya. "Africa is crucial for many operations, if you wish to serve Africa from this location then you need Kenya for its exports. In terms of export driven economies, there is nowhere else in Africa that can compete," remarks Pansin.
Transporting perishable goods is an area of expertise that Cargolux believes it is more than comfortable with. A transporter of fresh food products since 1970, it has years of experience covering all essential details concerning packaging, pre-departure delivery, ground times, correct storage, clearance and transport to final destination.
The Middle East, therefore, is a market very much suited to Cargolux, as it demands a high level of perishable product imports. Pansin believes the market to be a biased one, with a strong focus towards European products. He gives the example of Kuwait, where one customer began exporting 40 to 50 tonnes of meat every week from Belgium.
"I think the perishable market here is very important. It has been helped by Dubai Flower Centre, which we are hoping will soon become more operational. We are looking to channel cargo from various places more to Dubai than we do now," says Pansin.
"The trend is currently still that the perishables, namely all the flowers, are ending up at auction in Holland then distributed worldwide. Dubai has been investing a lot of money to have a similar scenario in the hope that it will attract similar customers to Dubai who can then distribute to rest of the Middle East and the Far East."
Although Pansin believes Dubai Flower Centre, the US $70 million perishable goods warehousing facility, has been a valuable addition, he is waiting for a 100% operational guarantee before relying on it as a viable storage option. The facility, when fully operational, is expected to be able to handle 180,000 tonnes a year.
Perhaps a harder challenge than the handling of perishables is the transportation of livestock that also makes up a large part of Cargolux's business. The company has in the past handled the most exotic of creatures, from a white rhino to a killer whale, through to the more conventional, such as sheep and goats.
Demand in the Middle East for pregnant cows currently fills Cargolux aircrafts. The fact they are pregnant means even greater precautions are required. Similarly, great care is required with the handling of racehorses, some of which can cost up to $5,000,000.
"We carry a lot of horses, racehorses and polo horses to the Middle East. We have been particularly active in the transportation of racehorses. There is still a strong demand for horses; we fly horses to Iran and Qatar for example, but not the amount we used to receive. This is due to these places establishing their own airlines with their own cargo equipment," reflects Pansin.
Perishable items, livestock, and indeed any other variety of cargo, is transported via Cargolux's own fleet. The company operates with 14 B747-400F freighter aircraft, which will be joined by an additional two models in the next two years. Eventually, the airline intends to move over to the new 747-8F.
"In 2009, we will get the new generation of Boeing aircraft. Cargolux has always been with Boeing, and I think the decision has been proved correct, especially now as you see the current situation with the A380," smiles Pansin.
The relationship between Cargolux and Boeing has proved to be fruitful. Each of the B747-400F planes contains four temperature controlled compartments allowing a combination of cargo to be transported. It also allows a variety of consignments to be transported at one time. For example, Cargolux charters seven flights a week from Kenya that carry 700 tonnes worth of flowers, meat and vegetables.
The weight tolerance of the aircraft is an absolute necessity. The aircraft is able to transport individual heavy duty good items of up to 45 tonnes, and Pansin is quick to point out that the greatest challenge is moving such goods to and from the plane.
"You have to be careful that you make sure wherever you land, the other end has the equipment to deal with it. In Sharjah and Dubai we have seen pieces between 38 and 40 tonnes each that are moved through the nose of the plane," marvels Pansin. "We have been carrying for the oil industry things you cannot imagine, all of which requires a crane."
An ability to cater for heavy duty handling has led Cargolux to become involved in the transportation of Formula One equipment, a prestigious job that includes Bahrain as one of the destinations. "We have been very active every year with the Formula One," says Pansin.
From racehorses to formula one racing cars, Cargolux has gained experience in transporting the most unusual of cargo across the Middle East. With a tighter managerial focus on the region and plans for expansion in 2007, the company looks set to further strengthen its position in the increasingly competitive market.