When it comes to moving complicated or sensitive freight by air, Cathay Cargo has the answers. Whether it's live cattle heading to Dhaka in Bangladesh, fresh cherries harvested at the height of New Zealand's soft fruit season or medicine manufactured in the USA that needs end-to-end cold storage, Cathay Cargo has both the expertise and the solutions to cater to all demands. Here, we find out how the business has responded to changing customer demand and take a look at its recent rebranding campaign.

Cathay Pacific Airways began life in 1946 with two propellor-driven Douglas DC-3 aircraft, "Betsy" and "Niki", that each carried just 15 tonnes of cargo per flight. A lot has changed over the nearly eight decades since. In 2022, Cathay Cargo carried 1.15 million tonnes of cargo in its dedicated fleet of 20 Boeing 747 freighters and in the bellies of the Cathay Group's 180-strong fleet of passenger aircraft.

During the recent pandemic, Cathay Cargo provided a vital service delivering vaccines and personal protective equipment around the world. It also bolstered the Cathay Group's overall business performance at a time when most people couldn't or wouldn't fly. Today, Cathay Cargo is globally renowned for its efficiency, expertise and reliability. It carries a wide variety of freight, ranging from thousands of tonnes of live lobsters to Formula 1 racing cars. But as that implies, this is a business that doesn't stand still, and Cathay Cargo is poised to make an even greater impact on the industry through innovation and exciting new solutions.

Playing to advantage

In fact, most of the world's freight is shipped by rail or sea – usually because of cost considerations. According to the International Air Transport Association ("IATA"), today's global air cargo industry represents less than 1% of global trade by volume. However, it represents 35% of its value: some US$6 trillion worth of goods. Customers see air freight as quicker, safer and more reliable for their high-value shipments.

"We move cargo that matters to the world," explains Tom Owen, Cathay's Director Cargo. "Everything that is transported by air is somehow vital to someone's life, somewhere. Whether it's a component for a construction project, a racehorse on its way to compete in Hong Kong, life-saving pharmaceuticals or fresh produce going to the supermarkets, air cargo matters."

What makes Cathay Cargo different is its expertise in moving challenging items – just one example being a helicopter shipped from Milan in Italy to Perth in Western Australia, to be deployed in the government's medical and emergency services. Helicopters are made up of fragile, complex, irregularly shaped and extremely expensive components that require special care when being shipped. Such was the intricacy of the operation that the team combined Cathay Expert, a customised freight service for unusual cargo, with Cathay Priority, a solution that provides optimal delivery speed, capacity and assurance. All partners involved – from the ground handling agents and the trucking company to the airport and regulatory bodies – worked in sync to ensure it was a success. The ability to deal with complexity means Cathay Cargo can achieve a higher yield by focusing on cargo that is difficult to ship. By doing so, the business aims to generate over a third of its revenue from specialist solutions, enabling it to stand out further from its industry competitors.

Another advantage for Cathay Cargo is that it is based in Hong Kong, which has been the world's busiest international air cargo hub since 1996. The city is blessed by its geographical location, which places it within five hours' flying time of half the world's population. Hong Kong enjoys an open economy, an easy-to-manage customs regime, and its airport's huge network of international destinations and flight frequencies. With this scale and capacity, Cathay Cargo is able to ship air cargo to most parts of the world quickly and efficiently.

Investing in solutions
In recent years, Cathay Cargo has devoted a lot of time, effort and money to upgrading its offerings to customers, focusing on digitalisation of its services, as well as unveiling new innovations that create more value for shippers.

Examples include Cathay Pharma, which offers cold chain solutions to pharmaceutical manufacturers worldwide via Cathay Cargo's 100% owned Cathay Cargo Terminal and its revamped Pharma Handling Centre at Hong Kong International Airport ("HKIA"). Customers say how much they appreciate the availability of online tracking with temperature visibility and status updates, as well as excellent customer service at both origin and destination. The relaunched Cathay Mail service, meanwhile, enables post offices worldwide to track and trace their mail while also providing them with a simplified billing and reconciliation system.

Click & Ship is another game-changing solution. A few years ago, arranging a shipment involved piles of paperwork, and bookings were made over the phone. The new online booking system puts complete control in the hands of the customer, so that the process is just as simple as an airline passenger booking their seat online.

 

 

Opportunities in e-commerce

E-commerce has been around a long time, but the pandemic saw a very dramatic increase in the popularity of buying and selling goods online, to the extent it has become a major driver of the airfreight industry; and while normalcy has largely resumed, consumers' appetite for e-commerce remains undimmed.

According to IATA data, 80% of all cross-border e-commerce shipments are transported by air. Over half of all e-commerce traffic is from the Chinese Mainland, with much of it going to North America and Europe, so Cathay Cargo, with its base at HKIA, is ideally positioned to take advantage of the significant uptick in e-commerce transactions.

"When customers shop online," says Tom, "they ask three things: 'Where is my purchase?', 'Is it in top condition?' and, probably most importantly: 'Will it arrive soon?'. That's where our range of solutions comes into play, as well as the geographic and logistical advantages that come with being based in the Greater Bay Area ("GBA")."

Cathay Cargo has also sought to collaborate with industry partners. In September 2022, it trialled an e-commerce shipment to South America in collaboration with LATAM Airlines.

 

Preparing for the future

The air cargo industry, like any other, is affected by the ups and downs of the global economy, with high inflation in many countries currently impacting consumers' spending ability and thereby weakening demand for airfreight. Managing this challenge in the short term until markets pick up again means Cathay Cargo playing to its strengths as the logistics partner of choice for high-end, sensitive freight. To this end the business will continue to streamline the services it offers shippers through increased digitalisation, at the same time prudently managing its cost base, leveraging the benefits of the Cathay Group's extensive network, and maintaining an optimal mix of dedicated freighters and available cargo space in the holds of its passenger fleet.

In the longer term, Cathay Cargo sees significant opportunities for further growth. In December 2023, Cathay announced that it has ordered six new-generation Airbus A350F freighters and has options to acquire 20 more, with delivery commencing in 2027. These commitments demonstrate the airline's confidence in both its long-term business model and in its home base of Hong Kong maintaining and growing its status as the world's busiest air cargo hub. Cathay Cargo is anticipating that further integration into the GBA will inevitably enhance Hong Kong's logistical capabilities – as evidenced by the airline's recent participation in a world's-first pilot, using IATA ONE Record data protocols for intermodal shipments accepted in Dongguan; meanwhile, the addition of the third runway at HKIA, operational by 2024, is also going to significantly expand capacity.

Cathay Group CEO, Ronald Lam, explains how he sees the future of the business: "Cathay Cargo has the vision of being the world's best air cargo carrier. Within the Group, Cathay Cargo is one of our four lines of business, the others being Premium Travel, Low-Cost Travel and Lifestyle – demonstrating how critical cargo is to us. I'm confident Cathay Cargo is on the right course to deliver the future for our customers as it continues to grow and excel."

Cathay's airfreight business has come a long way since 1946. Today, its range of capabilities and sheer reach would probably be unimaginable to those early pioneers of air cargo. But what hasn't changed is knowing how it's done and staying focused on innovation and striving to be the best in the industry. By those measures, today's Cathay Cargo is a true industry leader.