By Manik Mehta, Kuala Lumpur
Recognizing the limitations of its “end-destination business” ’ the term used for cargo shipment terminating at a destination, including Malaysia ’ the cargo unit of Malaysia’s national carrier, Malaysia Airlines Cargo Sdn. Bhd. (MASKargo) is increasingly relying on the lucrative transshipment business.
In an interview in his office at the Kuala Lumpur International Airport, MASKargo’s senior general manager (cargo), J.J. Ong, acknowledged that the carrier had been concentrating in the past few years on transshipment cargo. “If we depended on the so-called end destination cargo, we would be at the mercy of the economics of the destination markets,” he said candidly.
The significance of the transshipment business for MASKargo becomes obvious when one considers that it accounted for some 55% of the overall cargo volume of 640,000 tons handled by the cargo carrier in 2004. “And the share of the transshipment business is expected to grow further,” Ong added. Despite the growing competition from rival Asian carriers such as Singapore Airline, Thai Cargo, Dragon Air, etc., MASKargo has been able to assert its position.
Undeterred by the growing competition, the mood continues to be upbeat at MASKargo which is setting up an integrated warehouse next to its facilities at Kuala Lumpur. The warehouse is supposed to double its current capacity of 640,000 tons to 1.5 million tons by the year 2008, when the new warehouse equipped with the state-of-the-art technological devices is expected to be completed. MASKargo has appointed the Dutch group Logistics Consultancy Services Group in Amterdam as the consultant for the development of the warehouse.
According to its own projections, MASKargo’s cargo traffic is expected to post strong growth. As a result, it has become necessary for the carrier to expand its current fleet of seven freighter aircraft of B747-200Fs by adding two more B747-400 freighters to be acquired next year ’ one in February 2006 followed by another one in April 2006. The cargo carrier is using the B747-200 freighter for destinations in Asia whereas the B747-400 aircraft will be used on the long-haul routes in Europe. MASkargo freighters currently fly to Penang, Hong Kong, Melbourne, Sydney, Perth, Osaka, Shanghai, Hangzhou, Bangalore, Bangkok, Dubai, Taipei, Sydney and Tokyo.
Although the United States is the world’s largest air-cargo market, MASKargo does not yet operate a freighter service to North America. This is going to change in the future. “As far as the United States is concerned, we are presently transporting cargo in the belly of our aircraft flying to the United States. However, as demand increases, we also plan to lease aircraft from China Airline, Korean Airline, etc. for cargo transportation to the United States,” Ong said.
He acknowledged that competition in freighter services to the United States is getting fierce. “We have built up a relationship with our customers and established our position in the market. We need to concentrate on new innovative ways and even ways to reinvent ourselves in order to face the competition,” he says. There are already quite a few Asian airlines operating services to the United States; the latest to start services to the East Coast is Thai Air. Indeed, Hong Kong’s Dragon Air launched its maiden freighter service to New York in May.
China is the buzz word which is driving MASKargo to act fast in that huge market. The carrier has opened a warehouse in Hang-zhou, near Shanghai, which Ong hopes will enable MASKargo to build up a good quality service for its customers. “We are in fact the first foreign airline to set up a modern, dedicated warehouse in China,” Ong points out.
Besides China, India is also generating a great deal of interest among cargo carriers, according to Ong. “At one time, Southeast Asia wase a very good place for starting labor-intensive industries because of the abundance of labor. However, this has changed with the advent of India and China which are attracting more and more