Worldwide insecurity is putting the global air cargo industry through an uncertain time but Finnair Cargo has seen good growth in 2019 with October resulting in a record number of cargo tonnes in a single month.
Outlook for the air cargo industry in 2019 has been, holistically speaking, a bit on the patchy side of things with the International Air Transport Association (IATA) reporting (September) that global air freight is down 1.4% year on year with US-China being particularly hard hit.
According to IATA, global economic activity and consumer confidence have been impacted by factors such as trade tensions which have led to a downward trend that started already in mid-2018. Freight capacity measured in available FTK has consistenty outstripped demand since the final quarter of 2018.
Despite the global outlook, Finnair Cargo saw steady growth for the first half of 2019. Long-haul capacity increased with two new A350 aircraft that entered the service in December 2018 and in February 2019. Meanwhile, new managing director, Mikko Tainio has set a near-term target of hitting 1,000,000 kilos per day.
Finnair’s expansion in Asia continues to be very fruitful for Finnair Cargo, with strong market performance in China, Japan, Hong Kong and Southeastern Asia. Additionally, Finnair Cargo has seen a positive upswing in the Nordics, especially in Norway.
Finnair Cargo’s results in 2019 (click on the months to see full results)
- January saw scheduled cargo tonne kilometres (FTKs) increase by 17.2%* and revenue scheduled cargo tonne kilometres increase by 25.9%. This was mostly down to strong positive cargo market development in Japan and Western Europe, along with Nordic markets.
- For February, available scheduled cargo tonne kilometres increased by 16.2% while revenue scheduled cargo tonne kilometres increased by 26.2% mostly driven by strong positive cargo market development in Japan and Western Europe.
- In March, available scheduled cargo tonne kilometres increased by 18.4% with revenue scheduled cargo tonne kilometres increasing by 19.6%. Growth was mostly driven by the strong positive cargo market development in Japan and the Nordic countries.
- For April, there was a 27.0% increase in the available scheduled cargo tonne kilometres and revenue scheduled cargo tonne kilometres increased by 15.3% mostly driven by strong performances from Norway, Hong Kong and Southeast Asia.
- In May, available scheduled cargo tonne kilometres increased by 20.5% and revenue scheduled cargo tonne kilometres increased by 16.8% mostly driven by the positive cargo market development in Norway and United States.
- June saw scheduled cargo tonne kilometres increase by 15.4%. Revenue scheduled cargo tonne kilometres increased by 9.0% mostly driven by the positive cargo market development in Scandinavia and Finland.
- In July available scheduled cargo tonne kilometres increased by 15.1%. Revenue scheduled cargo tonne kilometres increased by 4.2%. The weak global cargo market was evident in July’s cargo performance.
- In August available scheduled cargo tonne kilometres increased by 13.1%. Revenue scheduled cargo tonne kilometres increased by 10.0%. Global uncertainty in world trade has reflected on the freight market and has generally lowered expectations, especially for cargo departing from Asia.
- September saw available scheduled cargo tonne kilometres increase by 13.7%, while revenue scheduled cargo tonne kilometres increased by 11.4%. Global uncertainty in world trade continued to weigh on the global air freight market, and market softness and yield pressures were especially visible in Finnair’s cargo markets in Asia.
- October resulted in a record number of cargo tonnes in a single month and available scheduled cargo tonne kilometres increased by 13.3%. Revenue scheduled cargo tonne kilometres increased by 6.2%. Global uncertainty in world trade continued to influence the global air freight market in October, and market softness and yield pressures were especially visible in Finnair’s cargo markets in Asia.
In August this year, the leadership of Finnair Cargo passed over to Mikko Tainio, former head of Finnair Kitchen. A long-serving employee and executive of Finnair, he brings considerable experience and a proven track record to air cargo. Mikko shares some of his views and ambitions about what the future holds.
You became Managing Director of Cargo at the beginning of August this year, but you have been with Finnair since 2005 most recently as head of Finnair Kitchen. Has the transition gone well?
I think it has, thanks largely to my previous responsibilities in Finnair that now serve me well in my new role.
At the group level, I held senior roles in administration and finance including a 6-month interim period as Chief Operating Officer of Finnair. During an earlier restructuring of the company, I led a programme to renew our cooperation with our partners and subsidiaries. This experience gave me insights into the financial foundations of the company and resulted in a successful reorganisation and increased efficiencies worth over 200 million euros.
At the operational level, I led ground operations for almost three years. Already from this experience I learned a great deal about cargo operations, about working with over 5,000 outsourced employees and partners, managing our activities at some 200 airports globally, and building our cooperation with Finavia, the operator of Finland’s major airports.
Has your previous role as head of Finnair Kitchen helped prepare you to lead the Cargo unit?
Yes, in several ways.
First, we recognised in 2017 that catering on our flights was a key success factor for Finnair and must become a core competency. The decision was made to transition catering operations from our outsource partner back into our own hands.
One could say we built a new business from scratch. We also realised that our catering operations needed to be brought up to the same advanced level of digitalisation as our passenger and cargo operations, so we participated in the establishment of our new digital platform, launched last year.
When you are serving over 14,000 meals every day, the benefits of having such a highly integrated, digitalised system become very clear.
Perhaps as important, the experience of running our catering business brought me closer to our passengers and I saw what we could achieve by being as customer-centric as possible. This led us to become more innovate and proactive, too. One example is that today we are a leader in customised selections of meals for both business and economy classes, and even cooperate with top Nordic and Asian chefs in our meal offerings.
All of this learning and experience, I believe, brings a healthy new perspective to our cargo business.
How would you characterise the current competitive posture of Finnair Cargo?
I would say that we are in good shape and ready to build upon our capacity and services.
We have transitioned through three critical events; the start of our acquisition programme for the Airbus A350 XWB aircraft in late 2015, the launch of our new digital cargo management system SkyChain a couple of years ago, and the opening of our 31,000 sq. meter COOL Nordic cargo hub last year.
Standing on the shoulders of these achievements, we are able to turn more of our attention to project development efforts and industry initiatives that deliver benefits to our customers.
These efforts include IATA’s paperless e-AWB (Air Waybill) initiative, our participation in the ONE Record data standard that will make possible a single virtual shipment record, and the cargo.one distribution platform that enables customers to compare airline capacity offerings and book space on our aircraft.
What else might we expect to see from Finnair Cargo in the near term? What excites you?
We do have many initiatives underway but I want to highlight two in particular.
First, we are growing our operations in a way that helps to minimise the environmental impact of flying, which of course includes cargo transport.
Our passenger customers have welcomed the Push for Change initiative to help offset CO2 flight emissions in a couple of ways – by simply clicking a button online, one can help purchase less polluting but expensive biofuels or provide clean cookstove alternatives to needy families in Mozambique.
Building on this success, we announced at the Air Cargo Europe show in Munich last June that we will expand the programme to include our cargo clients. By clicking a button, our cargo customers will also have the opportunity to purchase offsets or help fund biofuels just as their cargo is delivered in a carbon-neutral manner.
On the business growth side, there is a lot to be excited about!
We are expanding our cargo operations to three new Asian destinations: the new Daxing International Airport near Beijing, China; at Sapporo, Japan later in 2019, and at Pusan, South Korea during the first half of 2020.
The big winners here are our cargo customers, as transit times between Europe and the Far East are among the fastest when routed through Helsinki.
Together, our new facilities and aircraft, our digital modernisation, service initiatives now underway and expansion to new Far East destinations signal exciting growth potential and will help us realise our goal of delivering one million kilos of cargo every single day.
