Cathay Pacific

Cathay Pacific looks to increase higher-value cargo carrying

Carrier seeks to transport more high-value goods like diamonds and pharmaceuticals

PUBLISHED : Friday, 08 February, 2013, 12:00am
UPDATED : Friday, 08 February, 2013, 3:53am

Cathay Pacific Airways aims to replicate its business-class strategy in a cargo trade upgrade. It wants to fly more diamonds and medicines rather than T-shirts.

Nick Rhodes, the airline's cargo director, said: "Similar to the passenger service, we are not a low-cost carrier. We try to be a full-service cargo carrier. That's really our DNA."

The airline, the world's biggest international air-cargo carrier, will start operating its first independently owned goods terminal in Hong Kong later this month, increasing the airport's capacity by half. The airline has spent HK$5.9 billion on a facility it says will help Cathay target an increase of up to 20 per cent in more profitable shipments of high-value goods, perishables and vaccines.

Success with that strategy is critical to boosting profit in a business that accounts for over a fifth of the airline's revenue. Cathay has cut some cargo flights while Middle East carriers such as Emirates boost capacity and increase competition with Asian rivals.

Both Singapore and Korean Air Lines also want to move to higher-value goods even as the global air-freight market declined for a second straight year in 2012, amid a slump in demand across Europe.

Geoffrey Cheng, a Hong Kong-based analyst at Bank of Communications, which has a neutral rating on the stock, said: "Cathay chasing higher-end products will help broaden its cargo sources and boost revenue. It will lose to rivals if it fails to capitalise on the relatively faster-growing seafood and pharmaceutical demand."

A chain of 1,000 closed-circuit television and biometric fingerprint systems have been installed in the new terminal, according to Portia Cheuk, a spokeswoman for the facilities' operator, Cathay Pacific Services.

Measures are also in place to boost security when dealing with high-value items such as diamonds and gold bullion, she said.

At the terminal, the location that handles high-value items such as diamonds is the most restricted zone. Only a limited number of staff has access and visitors are limited.

Cathay, which moves cargo with 22 dedicated aircraft and in the bellies of passenger aircraft, carried 1.56 million tonnes of cargo and mail last year, 5.3 per cent less than a year earlier, the company said last month.

Revenue, measured by weight multiplied by kilometres, also fell 7.3 per cent to 8.94 million.

Globally, the air freight market shrank 1.5 per cent in 2012, according to the International Air Transport Association. Passenger demand increased 5.3 per cent.