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Cargo Airlines – Senior Executive Interview Series: Teddy Zebitz, Saudia Cargo

In the next instalment of our senior executive interview series, Teddy Zebitz, chief executive of Saudia Cargo, explains how the cargo carrier’s strategic agility aims to sustain growth in a challenging global market.

How are global economic conditions affecting the air cargo industry, and what implications does this have for Saudia Cargo?

Global economic conditions are presenting significant challenges for the air cargo industry. Recessionary pressures, fluctuating fuel prices, and geopolitical crises have all impacted global trade, leading to a noticeable decrease in air cargo demand. Additionally, the post-pandemic recovery has resulted in a 12% increase in market capacity, creating a supply-demand imbalance that is expected to persist through 2027.

Despite these challenges, the air cargo industry has shown resilience, rebounding to pre-pandemic levels in 2021. While the market experienced slow growth from 2010 to 2018, and disruptions like trade wars and Covid-19 caused significant slowdowns, the long-term outlook remains positive. IATA forecasts a +3.1% CAGR through 2030, indicating growth potential in the coming years.

At Saudia Cargo, we prioritise our strategic agility that allows us to adapt swiftly to changing market conditions. We remain steadfast in our focus on optimising operations and managing costs effectively to maintain profitability. Targeting growth areas such as e-commerce and specialised products will also be key to our strategy. Additionally, we are committed to sustainability, investing in technological innovations exploring sustainable aviation fuels and reducing fuel consumption and emissions.

We recognise the importance of our human-first approach, prioritising both customer needs and employee well-being. Attracting and developing top talent is also crucial, and we are enhancing our talent development programs, including initiatives like our Succession Planning Program with the Saudi Logistics Academy. Aligned with Saudi Vision 2030, we are dedicated to supporting local talent and producers, contributing to the transformation of the Kingdom and the long-term sustainability of the economy. Through these efforts, we aim to navigate current challenges and position ourselves as industry leaders for sustained growth and success in the ever-evolving air cargo market.

In a highly competitive market, what differentiates Saudia Cargo from other major players in the industry?

Saudi Cargo leads by leveraging our strong domestic presence, operational excellence, and specialised services. We are a dominant player in the region, capitalising on the Kingdom’s booming logistics landscape and Vision 2030 initiatives.

Our position as an industry leader is underscored by the recognitions we regularly receive such as Best Air Cargo Operations at the Logistics & Transport KSA Awards 2023, a testament to our unwavering commitment to providing world-class air freight solutions.

Operational excellence is a cornerstone of our success, reflected in our industry-leading On-Time Performance (OTP) for freighter operations. We maintain high standards in our handling practices, ensuring reliability and efficiency in every aspect of our service. Our specialised solutions, such as ‘Specialized Fresh’ for perishables and ‘Specialized Pharma’ for pharmaceuticals, cater to specific industry needs, further differentiating us from competitors.

Our human-first approach, built on social responsibility, employee engagement, and humanitarian aid, distinguishes Saudia Cargo as a company rooted in ethics and integrity. We also take pride in our impressive 81% score in the ‘Best Place to Work Award’.

From a global perspective, Saudi Cargo has demonstrated its commitment to humanitarian aid by delivering over a million kilogrammes of relief supplies worldwide. Through partnerships with organisations like the King Salman Humanitarian Aid and Relief Centre, they have provided essential support to disaster-stricken regions.

We are a leader in the rapidly growing e-commerce sector, fuelled by strategic partnerships with companies Cainiao and WFS. These collaborations, combined with our investments in digital innovation – such as E-Airwaybill adoption and our cutting-edge digital dashboard – enhance our service offerings and streamline operations. As a member of SkyTeam Cargo, our reach extends to 858 destinations worldwide, supported by a robust fleet of eight freighters and 83 widebody belly aircraft. With two strategic home hubs in Jeddah and Riyadh, we connect four continents and around 100 international destinations, ensuring efficient and reliable service for our customers on a global scale.

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Saudia Cargo operates to 858 destinations worldwide, supported by a robust fleet of eight freighters and 83 widebody belly aircraft.

What major trends do you foresee impacting the air cargo industry in the next five to 10 years?

The air cargo industry is set to experience transformative growth driven by several key trends in the coming years. One significant driver is the continued surge in global e-commerce, projected to grow 1.5 times by 2026, where Saudia Cargo is strategically positioning itself to play a key role in meeting this burgeoning demand for fast and reliable air cargo services. Overall, global air cargo demand is expected to rise at a 3.1% CAGR from 2022 to 2030, with traffic increasing by 5% in 2024 alone. This growth is projected to propel the aviation industry toward USD 1 trillion in revenues in 2024.

As passenger numbers increase by 10.4% in 2024, the industry will face capacity constraints, potentially leading to pricing volatility. Digital transformation through automation, data analytics, and artificial intelligence (AI) will optimise operations and enhance efficiency and can mitigate this uncertainty. There will be a strong focus on sustainability, driven by pressures to reduce environmental impact, leading to the more widespread adoption of sustainable aviation fuels and eco-friendly practices. The shifting geopolitical landscape will require the industry to adapt to evolving trade patterns and strategic network adjustments, as we at Saudia Cargo are doing.

Saudi Arabia under Vision 2030 is expected to experience significant growth in non-oil exports and the private sector’s contribution to GDP. Saudia Cargo’s strategic expansion, operational reach, and support of homegrown talent will support Saudi Arabia’s position in the air cargo and logistics industry, create new opportunities for Saudis, and enhance their professional skills.

Saudia Cargo’s growing trade relations with key partners such as China and initiatives like ‘Made in Saudi’ will bolster the export sector and contribute to the Kingdom’s economic diversification, and together with advanced technologies and robust cybersecurity measures, we will continue to lead in this evolving global marketplace.

How is Saudia Cargo leveraging advancements in digitalisation to optimise operations and drive efficiency?

Always searching for innovative solutions to improve cargo operations, enhance efficiency, and elevate the customer experience, Saudia Cargo has been at the forefront of digitalisation adoption in the industry, cementing our position as a leader in digital innovation within the air cargo industry, ensuring a seamless and optimized supply chain experience for our customers.

Our partnership with Unilode Aviation Solutions has enabled us to digitise 96% of our Unit Load Devices (ULDs). This, coupled with strategically placed Bluetooth readers and our innovative e-ULD mobile app, allows for real-time tracking and enhanced visibility of ULDs, even beyond fixed reader locations, significantly reducing ULD losses and repair costs.

Additionally, Saudia Cargo’s Digital Dashboard provides real-time insights into cargo flight performance, enabling us to make data-driven decisions, optimise resource allocation, and maintain operational excellence across our network. Our E-Airwaybill (e-AWB) adoption rate, surging from 71% in 2022 to 85% in 2023 is further evidence of our commitment to digitalisation that not only streamlines operations but also aligns with our sustainability goals.

Saudia Cargo is not just adapting to the digital age; we are actively shaping it. We are committed to leveraging the power of digitalisation to drive efficiency, transparency, and an unparalleled customer experience within the air cargo industry.

What are the main goals of Saudia Cargo for the remainder of 2024?

For the remainder of this year and beyond, our goals are centred around growth, network expansion, and maintaining operational excellence. We aim to double our fleet capacity within the next 18 months, positioning ourselves to handle increased demand and achieve a projected 16% growth for the year. Additionally, we are focused on increasing the average spend per e-commerce user by 50% over the next three years, ensuring long-term profitability and customer engagement.

Our network expansion efforts will focus on consolidating new routes to key locations such as Shenzhen and Zhengzhou, while also exploring additional strategic destinations to enhance our global reach. In terms of operational excellence, we aim to sustain our high on-time performance and further improve handling efficiency, ensuring that we continue to deliver reliable and high-quality services to our customers, being a name they can always rely upon.

With a global surge in e-commerce over recent years, how has Saudia Cargo adapted its operations to meet the increased demand for fast and reliable shipping?

Saudia Cargo strategically adapted its operations to meet the increased demand for fast, efficient, and reliable shipping, developing specialised e-commerce solutions, including tailored services with expedited delivery, dedicated teams, and advanced tracking systems, ensuring streamlined and transparent logistics.

Through strategic partnerships with companies Cainiao and WFS, we have optimised cross-border e-commerce logistics and expanded our capacity, allowing us to enhance our network, opening new routes to key e-commerce hubs like Shenzhen to facilitate direct connectivity and improve delivery times. Our successful efforts to streamline our processes have significantly enhanced operational efficiency to yield impressive results with an average growth rate of 22% in the e-commerce logistics sector over the past three years. In 2023 alone, we achieved a 20% year-on-year growth in e-commerce volumes and operated over 100 e-commerce charter flights.

Our strategies were particularly successful in the latter half of 2023, where we experienced a 61% surge in e-commerce volume in Q3, followed by a 36% increase in Q4, significantly boosting the flow of e-commerce goods into Saudi Arabia. By November 2023, we had increased the transported weight for e-commerce shipments by 19%. Our extended contract with WFS/SATS for handling over 50,000 tonnes annually on flights connecting Liege and Riyadh also underscores our growing commitment to enhancing global e-commerce logistics.

Additionally, we expanded our cargo destinations to over 90 global locations via the cargo.one platform and increased flight frequencies to Hong Kong, responding to the growing e-commerce demand with 16 weekly flights. Our continued focus on e-commerce has also led to a 34% volume growth in Q1 2024, solidifying our position as a leading innovator and trusted partner in the e-commerce logistics sector.

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By balancing belly and freighter capacities, Saudia Cargo has managed to achieve remarkable milestones, handling over 506 million units in 2023 alone.

Can you discuss Saudia Cargo’s efforts towards sustainability and how you are addressing environmental concerns within the industry?

Saudia Cargo is committed to sustainability and has implemented a comprehensive strategy to address environmental concerns within the industry. This year, we established a dedicated Sustainability Committee, which drives our sustainability initiatives and we published our first Sustainability Report. These actions reflect our commitment to transparency, accountability, and alignment with IATA’s goal of achieving net zero emissions by 2050.

We have undertaken several key initiatives to reduce our environmental impact. Notably, we achieved a 1,051-tonnes reduction in CO2 emissions through the implementation of fuel burn reduction procedures and reduced fuel consumption for our Road Feeder Services in Europe by 21% through the use of Hydrotreated Vegetable Oil (HVO).

Our efforts extend to operational practices as well where we have reduced the use of cargo plastic wrap by switching to environmentally friendly materials, and operated B777 freighters that are approximately 20% more fuel-efficient than the B747. Moreover, we have implemented flight procedures that encourage optimal pilot behaviour, contributing to a projected 20% reduction in fuel consumption by 2027 compared to current levels.

In Q1 2024 we transported 80 containers of pharmaceutical products using environmentally friendly equipment, showcasing our commitment to reducing paper usage. These efforts underscore our dedication to creating a responsible and sustainable future for both the Kingdom and the planet, as we continue to align our operations with the highest environmental standards.

Where do you see the biggest opportunities for growth in the air cargo sector, and how is Saudia Cargo positioned to capitalise on these opportunities?

The air cargo sector presents significant opportunities for growth, particularly in regions where economic expansion is expected to outpace the global market, such as here in the Kingdom. Saudi Arabia’s economy is projected to drive a corresponding increase in air cargo import demand, strategically positioning Saudia Cargo to capitalise on this trend. With e-commerce poised for substantial growth in KSA, we are targeting key routes in both developed and emerging markets to meet the rising demand.

Our recent expansion into China exemplifies Saudia Cargo’s proactive approach. In 2023, we recorded an 11% increase in shipping volumes to China, up from 8% in previous years. To further strengthen our presence in this key market, we launched direct routes to Shenzhen on March 16, 2024, with twice-weekly flights on Mondays and Fridays, and recently opened a new route to Zhengzhou. Additionally, the inaugural shipment of Saudi shrimp performed in collaboration with the Jazan Development and Investment Company (JAZADCO) to China, completed in collaboration with Saudia Cargo, highlights our ability to facilitate specialised cargo shipments, which we anticipate will continue to drive growth in air cargo volumes.

Overall, we are well-positioned to leverage these growth opportunities through strategic network expansion, targeted market engagement, and a focus on high-growth sectors like e-commerce and specialized cargo, ensuring that we remain at the forefront of the air cargo industry. Our investments in fleet expansion, digitalization, and sustainable practices ensure that we remain at the forefront of the global air cargo market, ready to meet the evolving needs of our customers and capitalize on emerging opportunities.

Reflecting on your role as CEO of Saudia Cargo, what significant lessons have you learned about your organisation, and of the dynamics of the air cargo industry?

First and foremost, resilience is crucial. Over the years, Saudia Cargo demonstrated an extraordinary ability to adapt, innovate, and excel. The complexities of global air transportation require not just strategic resource management but also a deep understanding of the market’s evolving needs. Our success has been driven by a cross-functional approach that emphasises results, quality, and growth. By balancing belly and freighter capacities, we managed to achieve remarkable milestones, handling over 506 million units in 2023 alone.

The air cargo industry is dynamic and constantly evolving, and it requires a leadership style that is both visionary and adaptable. I have learned the importance of fostering strong partnerships and staying ahead of industry trends to maintain our competitive edge. At the same time, our role in supporting Saudi Vision 2030 has reinforced our commitment to transforming the Kingdom into a global logistics hub. This mission is not just a goal but a responsibility that drives our every decision.

Through these experiences, I have come to appreciate the critical role Saudia Cargo plays not only as a cargo carrier but as a vital link in the global supply chain. Our focus on innovation, customer-centricity, and strategic foresight will continue to guide us as we navigate the future of air cargo.

OTHER INTERVIEWS IN ABN’s CARGO AIRLINES SENIOR EXECUTIVES INTERVIEW SERIES:

Greg Schwendinger, American Airlines Cargo – read now
Jae Dong Eum, Korean Air – read now
Stanislas Brun, Etihad Cargo – read now
Lars Jordahn, Maersk Air Cargo – read now
Maksym Sanotskyi, Antonov Airlines – read now

 

The post Cargo Airlines – Senior Executive Interview Series: Teddy Zebitz, Saudia Cargo appeared first on Aviation Business News.

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