Innovative prospects
South African Airways is seeking its place in the industry. In this critical phase of its history the ITJ met up with Justice Luthuli at the Fiata World Congress in Cape Town to ask him about cargo activities, which he has been in charge of since spring. He was previously SAA Cargo’s head of operations for 14 years. The engineer has his own way of looking at things.
What is SAA Cargo’s standing in SAA?
SAA is currently rebuilding its capacities, with a view to facing the next decade with a solid foundation. Over the past few months we’ve made a focused effort to fill key leadership positions in the organisation, to effectively turn the group around for the long term. I was asked to stabilise business while the organisation restructures its cargo strategy.
The cargo unit aims to play a significant role in this process, given its current profitability status. We boast one of the best profitability models in the air cargo industry, accounting fully for all our services in a manner that gives a good picture in terms of our profit / loss status.
What activities need to improve?
We’re in the process of reviewing our air cargo enterprise management system (Acems), with a view to upgrading and refreshing the ‘i-Cargo’ system, to ensure stability. This will be followed by further enhancement of the system, bringing the new aspects of our business in line with our ambition to be a central player in the e-commerce sector. We see growth in the next five years coming from this field, driven by our strategic partnerships with other network providers.
How big is your network?
Our network remains vast. We have no less than 19 direct entry points into Africa, two into the USA (New York, Washington), one into South America (São Paulo), two into the Asia-Pacific region (Hong Kong, Perth) and three into Europe (London, Frankfurt, Munich). Together with our network partners we cover more than 82 destinations. The partnerships leverage interline agreements through SPAs, intermodal services from truck to air, and by purchasing capacity.
Allow me to give you an example. SAA exited the Netherlands more than ten years ago, but we still command a substantial market in the Benelux region, achieved through our partnership with third parties. This sustains the visibility of our 083 AWB prefix and reaches those customers who believe in the SAA brand.
How has business been going of late?
Our volume dipped below 100,000 t in 2018, on account of a network review that our scheduled flights are currently subject to. The plan is to regain throughput through our mixed network model, which is made up of scheduled flights, full-freighter operations and strategic partnerships with third parties.
What is South African Airways Cargo’s core market expertise?
We pride ourselves on our vast network, linking Africa to the world and the world to Africa. Currently it is affected by the network transformation that is part of our attempted turnaround. We’re rebuilding this through our restructured cargo network, integrating a balance between scheduled services, full-freighters and third-party solutions, as well as between intercontinental markets, which we serve with 27 widebodies, and regional markets, where we deploy 17 narrowbodies. We use our two Boeing B737Fs mainly to ensure seamless transhipment between international and regional markets.
Another strength is that our facilities in South Africa are easily accessible and very secure. We’re currently remodelling and modernising our terminals, to achieve greater efficiency. On top of this we have very experienced staff who are fully versed in all aspects of the cargo business. We’re currently working on revitalising and re-energising our employees.
What activities does SAA Cargo need to improve most of all?
We have to renew our processes and thus refresh our products; we also need to develop special services, such as cool chain solutions. We’re progressing on refreshing Acems, to bring it up to date. Furthermore, we need to do more to attract the younger generation into our business. All of this has to be seen in the context of our financial constraints, of course.
How do you see the conditions for (air) transport and logistics in general in your home market?
SAA is part of a very competitive national transport and logistics system. Our roads are competitive and link up our cities well. On top of this there is also adequate rail infrastructure, also connecting the country’s ports. South Africa also has modern and cargo-friendly airports. All this has resulted in the presence of several global logistics providers in the country.
According to the World Bank’s Logistic Performance Index, South Africa was ranked No. 33 (out of 160 states worldwide) in 2018, and No. 1 in Africa.
Interview conducted by Andreas Haug
