Interview: Qatar Airways chief cargo officer Ulrich Ogiermann
According to Ulrich Ogiermann, chief cargo officer of Qatar’s flagship-carrier Qatar Airways, the opening of Hamad International Airport’s (HIA) new cargo terminal in December 2013 – five months before passenger operations began at the gateway – was a ‘game-changer’ for the country’s wider freight-forwarding operation, writes Martin Rivers.
While Qatar’s myriad infrastructure projects are as diverse as one would expect for a rising industrial powerhouse, they can nonetheless be united by one common denominator: freight, the oxygen of the global economy. Freight forwarding may not be the most interesting of sectors – it certainly garners less media attention than passenger transport – but with cargo traffic closely mirroring global trade, the industry serves as a litmus test for economic health.
In the case of Qatar, it is the free flow of freight that enables the Emir His Highness Sheikh Tamim bin Hamad Al Thani to make good on the various promises outlined in the Qatar National Vision 2030 – building public facilities for a blossoming tourism sector; exporting domestically-produced chemicals and construction materials to reduce energy dependence; and importing high-end goods for an ever-expanding, increasingly well-to-do population.
With Doha already established as one of the world’s busiest intercontinental hubs for passenger traffic, it is little wonder that HIA is playing a pivotal role in developing this cargo-centric economy. Air freight may account for just 0.5 percent of global cargo volumes, but it captures more than one-third of goods by value.
“We came from a completely manual environment to a quite sophisticated new facility which is fully automated,” Ogiermann, who formerly headed Cargolux, Europe’s largest cargo airline, explains to The Edge. “There were constraints at the old airport. With the growth we had obviously outpacing the full capability of the old warehouse. But now it’s a 1.4 million tonne [per year] facility, and we are already in the design phase for the extension of the cargo centre – bringing its capacity to at least 2.5 million tonnes.”
Much of the freight arriving in Doha is a side-product of the flag-carrier’s ever expanding passenger fleet. Qatar Airways today operates 137 passenger jets, each of which has belly capacity beneath its main deck. Given that up to 10 percent of an airline’s revenue will typically come from freight, leaving those holds vacant would put the Doha-based carrier at a major competitive disadvantage.
Intensive efforts are therefore made to market the space to freight forwarding partners, with the company relying on the same intercontinental hub model that has fuelled rapid growth in its passenger business. The launch in 2014 of two services for high-yielding customers – Q Pharma and Q Fresh – underscored these efforts. Both products utilise specialist-handling facilities on the ground and containers in the air to ensure that temperature-sensitive shipments reach their destination in the best possible condition.
“You cannot do everything alone. You can grow certain trade links together with a partner, and we are very interested always to work in partnerships. That’s clearly win-win for everybody.”
“Take the example of our flower shipments from Nairobi to Europe,” Ogiermann says, referring to one of the world’s busiest floriculture trade corridors, which is increasingly being served with stopovers in the Gulf. “We have the facilities in place in Doha so that anything related to perishables or pharmaceuticals get transferred between the aircraft in [cooled] reefer trucks.
“Other carriers in the Middle East have tried to work with thermal blankets that they put over the pallets,” he adds. “But once a pallet of flowers has somehow heated up, they start to cook, and you cannot stop the process of deterioration. Our temperatures are fully under control.”
The airline’s pharmaceutical offering was expanded this year with the launch of Pharma Express, an enhanced service that uses dedicated freighter aircraft rather than hitching a ride on passenger flights. Since January, this has involved twice weekly flights from Basel and Brussels to Doha, from where temperature-sensitive pharmaceutical goods are broken down and re-distributed to the East.
At present only the Swiss and Belgian cities are designated as points of origin, but Ogiermann stresses that certification efforts are ongoing for additional trade lanes. With Indian pharmaceutical exports valued at USD15 billion (QAR55 billion) per year, the sub-continent is a prime candidate for expansion of the product.
Alongside the seamless cool chain for pharmaceutical and perishable goods, HIA’s 55,000 square metre, two-storey cargo terminal also features a live animals area – providing comfortable accommodation and inspection facilities for creatures as diverse as camels, reptiles and fish – and a dangerous goods room complying with the stringent safety standards laid down by the International Air Transport Association (IATA).
“We came from a completely manual environment to a quite sophisticated new facility which is fully automated. There were constraints at the old airport, with the growth we had obviously outpacing the full capability of the old warehouse.”
Transit times are kept as low as possible, allowing self-contained cargo pallets to hop from one flight to another as quickly as passengers. In cases where freight containers need to be broken down and re-distributed to different destinations, layovers of six to eight hours are more common. But Qatar Airways’ early adoption of IATA’s e-freight protocol ensures that the ground staff is well prepared for the handover.
“Electronic airway bills clearly take the pressure away, because the [freight forwarding] information is entered just once into the system,” Ogiermann explains. “We know what kind of cargo is coming in, and we obviously prepare for the next flight…That’s an automatic process that runs in the background.”
Qatar Airways does not release load factors for cargo, so it is impossible to know whether such services have allowed tonnage growth to keep pace with the massive increases in cargo capacity. Looking solely at the available traffic data, however, it is clear that business is booming. Whereas the flagship-carrier’s passenger traffic (as measured by Revenue Passenger Kilometres) has risen nearly sevenfold over the past decade, its freight traffic (Freight Tonne Kilometres) has expanded more than 11 times over.
This is not solely due to belly capacity, as Qatar Airways is also continually expanding its main-deck freighter fleet. The airline currently deploys 14 freighters – eight Boeing 777-200LRFs and six A330-200Fs – and Ogiermann is positive on the need for more. Orders are already in place for another four 777-200LRFs and two A330-200Fs, with at least one of the Airbuses due to arrive by the end of the year.
“We want to run a very non-complex fleet,” adds Ogiermann, “so we’re very happy with maintaining the 777 and 330 freighters,” the cargo chief says. But he adds that the need to offer different weight brackets could yet see a larger 747-400F wet-leased for “charter-orientated” activities.
As more freighters enter the fleet, Qatar Airways will increasingly look to so-called fifth-freedom stopovers to bolster existing trade corridors. London, for example, presents an attractive opportunity for growing in the European market.
At present the cargo division deploys a five-times weekly freighter to London Stansted Airport, as well as utilising space on its six daily passenger flights to London Heathrow Airport. By using the British capital as a stopover for onward flights to America – something that would require regulatory approval from both governments – Qatar Airways could spread the risk of US expansion, bundling its own Doha-origin freight together with pre-existing UK-US transatlantic cargo flows.
The fact that Qatar Airways now owns 10 percent of International Airlines Group, the parent company of Oneworld alliance partner British Airways, only strengthens the appeal of such an approach. Qatar Holding’s 20 percent stake in Heathrow further sweetens the business proposition. But Ogiermann is careful not to talk up any prospective deals, instead voicing general enthusiasm for broad-based partnerships.
“Nothing is ever off the table, but we are very, very careful in what we are doing. The most important thing is the quality of every partnership,” he says. “You cannot do everything alone. You can grow certain trade links together with a partner, and we are very interested always to work in partnerships. That’s clearly win-win for everybody.”
Even by itself, Qatar Airways already serves 47 points around the globe with non-passenger aircraft. It added 11 freighter destinations last year alone. While some rivals see this as an opportunity for cooperation, others consider the government-funded growth to be anti-competitive.
As has been well publicised of late, several legacy airlines in America and Europe have accused Qatar Airways of distorting the global marketplace by building its business around international traffic flows that use Doha as a bridging point, rather than an end destination. The pace of growth, it is alleged, stems from political design rather than commercial success.
Ogiermann is unmoved by such arguments, insisting that his mandate is simply to make Doha the centre of the world for freight forwarding. “It’s not that we aim for an impressive number of stations. We go where the business wants us to go,” he concludes. “We’re following the needs of our customers – they tell us where they want us to operate, and we go according to their needs.”