Swiss WorldCargo is looking to 2018 as a year of ongoing consolidation after a good 2017, Ashwin Bhat, head of cargo at Swiss International Airlines, told Asia Cargo News in an interview.
Interviewed in its close period when it is not allowed to state figures, Bhat said Swiss saw results increase between 10% and 15% last year compared to 2016. What is already known is the carrier saw an increase of between 10% and 12% in terms of tonnes transported for the Q1-Q3 period in 2017.
Without disregarding the role of e-commerce, Bhat gave two prominent reasons why things are perky for the carrier. At the forefront is the increase in demand as the world economy picked up. “We benefited from the upturn,” Bhat said, noting that a significant portion of cargo has moved from sea to air. “This helped with the momentum,” he explained.
On the other side of the equation is that capacity was tighter across the industry.
Specifically helping Swiss, Bhat said, this momentum came at the right time, just as the airline was adding new capacity. Swiss has just replaced its Airbus A340s with nine Boeing 777s (with a 10th due imminently), which gives it 15% more payload. One reason why 2018 will be a year of consolidation for Swiss is that its capacity has increased. Digesting that without new routes more than allows to hold its own.
Bhat said that no freighters will be joining Swiss this year or for some years to come. “The belly capacity is perfectly situated to our needs,” he said.
What is interesting is that in an era when e-commerce is so important, especially in Asia, Bhat does not cite it as a particular reason for growth. “It’s been significant” as a driver, he said, but Swiss knows that it cannot escape the consequences of the e-commerce revolution, and while it is looking at e-commerce, it is guarded about what it will do in response to it.
One other reason for taking a cautious approach to e-commerce is “what Swiss has in its backyard,” as Bhat termed it. Famed for its banks and pharmaceutical companies as well as chocolate and expensive watches, Switzerland offers the airline mainly two markets: pharmaceuticals and special services for wealthy individuals and institutions. Special services include the secure movement of bank notes, documents, gold, precious stones and works of art. Special services and pharma are both long-term markets for Swiss. “It’s not a new focus,” said Bhat, adding its share of special services is “relatively high.”
They are both lucrative. “Whenever there is a downturn, the pressure is on the general cargo,” said Bhat, adding that “the special cargo is immune to the downturn.”
While pharma is very much on the mind of Swiss, it does not feel the need to diversify into perishables, despite the affluence of Swiss consumers who would likely generate powerful demand. “That’s a segment we play but we do not have a special product,” said Bhat.
Another twist is that one of the niches Swiss does claim is the export of cheese from Italy into Asia. But, again, it fits with the airline’s overall strategy: there is no specific product for Italian cheese, but Swiss will move it, providing it fits into its existing service portfolio, Bhat said.
2018 will see another part of the carrier’s strategy slot into place with CEIV certification for the company, which is expected later this year. Once achieved, the plan is to achieve similar certification across the entire airline.
This is the culmination of a much longer campaign of boosting standards. This began with the first quality corridors in 2016 between Singapore and Zurich, and moved on to all Swiss WorldCargo stations abroad. In the last quarter of 2017, Swiss had 50 quality corridors, said Bhat. (Quality corridors are basically networks of certified trade lanes offering high quality in global, cold chain handling between pharma destinations.)
Like the rest of the industry, Swiss is looking next at how it can use technology to work more collaboratively with its partners.
One area already being examined is the use of Big Data. Swiss gets some 70% of its orders via e-mails, so rekeying each order, even if done briskly, with the large number of multiple orders Swiss gets each day, is a cost. Swiss as a company is looking at e-commerce as a business line, but doesn’t say much and is taking a cautious approach.
“Tech is going to disrupt one way or another. We have to see what is going to happen with all these IT companies,” Bhat said.
Another area where the consolidation strategy of Swiss will be seen clearly is in its network. The market might be booming, but Swiss is not looking to bag more of it by opening new routes.
Where it will see new openings is through the expansion of its sister carrier, Edelweiss, the holiday airline of parent company Swiss International, which is opening services to Ho Chi Minh, Colombo and Buenos Aires with former Swiss A340s.
“It gives us enough capacity to have a good footprint,” said Bhat.
By Michael Mackey
Southeast Asia Correspondent | Bangkok