Listen: Cargo Facts EMEA 2023 roundup

In this week’s episode of the “Cargo Facts Connect '' podcast, Cargo Facts Editor Jeff Lee and Associate Editor Robert Luke are joined by Cargo Facts Consulting Senior Consultant Jim Edgar live in Dubai to discuss Cargo Facts EMEA 2023, the direction of the air cargo industry and potential movements and transactions to come. The trio provide an impartial outlook of the current market, including feedback from industry leaders who attended the conference In addition there is a discussion of Zero Petroleum's new synthetic aviation fuel and the impact it could have on the industry. Tune in to hear about these topics and more for the week ended Feb. 10, 2023. A transcript is available below. This transcript has been generated by software and is being presented as is. Some transcription errors may remain. Robert Luke Hello, and welcome to this episode of cargo facts connect the podcast of cargo facts, the newsletter of record for the air cargo and freighter aircraft industries for over 40 years. I'm your host Robert Luke, associate editor of cargo facts. Jeff Lee And I'm Jeff Lee, editor of cargo Facts and we are here just finishing our event in Dubai cargo facts EMEA and we're here with, again, Jim Edgar Senior Consultant of cargo facts consulting. Jim, what, what did you think of this event? And what do you think were the were the main takeaways this time? Jim Edgar Well, I must admit going in I had expectations that we'd hear more about overcapacity, particularly Freighter over capacity, particularly in view of the the economic uncertainties that everybody's aware of. And, frankly, I was pleasantly surprised that that wasn't the case. I heard quite the contrary. My takeaways were that this is long term business. That's no surprise. But that, I think, generally, particularly from the session, the final session, that I moderated from the for lessors, that they were pretty bullish about the future, about the need to upgrade a fleets, some of the equipment's getting a little old. And I didn't detect hesitancy on their part, to commit to new investment or ignore or reticence from the financial community to support that. Robert Luke I have to agree with you, Jim. And thanks for coming back on. One word that stuck out to me that really gave me reassurance that whether it's short term, or long term, this too shall pass is that everyone emphasize that this is cyclical. So being in the industry, as leaders of the industry for multiple years, they came in fairly confident, but more importantly comfortable, that this is a situation that can be managed, from the responses that a lot of operators have been indicating demand has still been pretty stable for the most part, and they just redirected their assets to apply to those areas of need, where the demand is still strong. One of the takeaways that I took from the event as well was that the European market is still pretty strong and vibrant. Even from a cost perspective. They're earning more from the European sector right now. So that's a good thing. I do believe that a lot of the knowledge that I came away with from this event, because I don't let me reassure it. But it's given me confidence and encouragement that all of the conversions that we're seeing coming into play now will be dispersed in an appropriate manner in an area where there's a need, and that all the operators are pretty much now starting to continue the plans that were originally going to be initiated for the retirement of the older assets prior to COVID. I don't know if it's going to be accelerated or not, but they are starting to schedule their retirements out as more newer and younger conversions and factory built new builds start to come into play and the equation of this industry. So that's what I took away from it. Jeff, what are your thoughts? Jeff Lee Well, I mean, I was gonna say, yes, the market seems to be slowing down. And we know that, but isn't it it is still in many cases better than it was in 2019. And I was also gonna say there are pockets of opportunity and maybe even growth. I remember your session with air Atlanta Icelandic and MENA Cargo, where Baldwin was saying that he didn't he wasn't actually seeing a dramatic decrease in their operations and block hours. Yes, a slight decrease, but they are still already really locked in for the next one, two years. Right. And and the other thing is that Iman was also saying how they see opportunity. And this is why they're excited about the launch and their upcoming growth and their network. And on a similar note, this morning with Hamdi on the Africa panel, he was saying actually, this is the best time to be launching a new operation in your airline. So yeah, there are just because the market is slowing doesn't mean they aren't opportunities for growth. Robert Luke And most of these operators as well as the lessors are always projecting a minimum of five years out while they still manage the day to day operational needs. And one thing as I piggyback off of what you said, and definitely want to recognize Iman Marco and baldwin Hermanson, and thank both air, Atlantic, Icelandic and Asia cargo network for joining us this week, is that everyone seems to be really, really excited about Saudi 2030. That seems to be a very strong proponent and even Teddy in your session mentioned that, you know, that was something that they were very encouraged by looking forward to. And it's more like a unification of all of the logistical assets from the ground rail and air transportation modes that are starting to kind of come together and unify the resources in their customer portfolios to kind of, you know, generate the more revenue possible within the region. So, again, I don't think that we're going to have clear blue skies but when it rains, I don't think it's going to pour. Jeff Lee Yeah, and joerg androif on your session, Jim, was also saying he actually expected more more operators more airlines to if they're not already to become more interested or even to actually get into wide body Freighters. Jim Edgar Yeah, and, you know, thinking, with my decades of experience, I don't sense a doom and gloom, you know, past downturns, and we've certainly had more than our fair share. And without getting too carried away. I really think it's possible for somebody to cite a real paradigm shift during the pandemic, when the the value and importance and criticality of air cargo was emphasized. And I think back to the the airshow that you attended Jeff, and the preponderance of activities and stories that were generated, I've just never seen anything like that, in years past. So what I'm thinking is that if maybe there's a new realization and appreciation of the role and value of air, cargo and freighters, and through a wider audience than ever before, and that might be contributing to a more balanced view of market weakness, and taking the long view on filling capacity needs instead of retrenching immediately. And so, you know, maybe it's part of what people realize, remember this supply chain crisis, and people are saying, hey, this, this air cargo is really, really fundamentally important for a healthy economy, even in times when it's not so strong. Jeff Lee And we're seeing not just the traditional players, but seeing smaller players entering the market. And I'm talking about both Farnborough and here, but we've been talking to some interesting new, potentially new players. And maybe that isn't too surprising, because with some of the larger groups, it's things don't happen at quite the same pace of the constantly big investments or big decisions like that as quickly as some of the smaller players. So it is interesting. And yeah, we'll continue to follow up on some of these potentially new players as they go along. But yeah, I thought it was interesting. Robert Luke And I'd say one thing that really stuck out to me just now and and you all kind of triggered this from my memory. So thank you was session four where, you know, like you said, this industry is just like any other industry where there are big pieces to the puzzle in small pieces. And George Seturidze over at camex airlines, excuse me if I butchered your last name. But Alex Harrington made some very valid points where Alex is saying, I am just going to stick with my A 320 ones, I'm not going to get more than five. Because this is what I feel operation is where operation is going to maximize their profit potential. So he just told you that this is my space, this is where I'm gonna stay. And this is where I'm going to thrive. And you know, George said, hey, 320 ones are great, but the 737 800 has a well recognized brand and identity over in our region, and this is what we're going to operate and, you know, we're going to just stay leasing right now because that's our space. We're not trying to own brand new or do a full conversion that we will take complete full control over. So everybody's just kind of you know, had a you know, after the after the party kind of settled and settling down and understanding this is what we need to do to keep things moving forward. Now that you know, we've experienced the COVID bumping, massive record braking, great movement, this is my space. And I think that's what I came away understanding from Session Four, it was very informative from that angle. And even with ASL, you know, there are a larger group, but it's the same respect, they said, Hey, we're gonna get A321s because we already have AOC's with Airbus equipment, we can put those aircraft on that AOC, where we already know how to manage and operate that equipment. And it's not going to be mixed in with our Boeing products, because then it is kind of a cross stream, and it doesn't make sense. So it's just recognition and awareness and strategically moving in a path that gives you or, or gives you or use you the greatest benefit on your arm revenue potential. So that was one of the things that I thought was was great, as far as EMEA is concerned. Jeff Lee Right. And one of the things we tried to focus on with this event, of course, is innovation and the future. And we had that didn't wait with the drone session, which I thought was interesting, but also, today's presentation on zero petroleum. And I think people do need to kind of take note of this stuff in that how it's important for this industry going forward. Robert Luke I will agree. And I will definitely think Paddy Lowe and his team for joining us today, that was a great experience to just see, in actuality, and not just kind of hear about the things that are being done. But the presentation he gave was awesome, because he said, I'm not going to tell you about it, I'm going to show you how this works. It's already proving and to me, I'm encouraged by the fact that his actual fuel, the synthetic aviation fuel that he presented today, was tested with the Royal Air Force. And you know, that's a top notch military outfit, and they don't just take a chance to say, hey, we're gonna go out on the wire and just see if this works. They did their homework. And to me, that gives me a level of confidence of knowing not only is this a capable product, but you have the tangible resources needed to support a major infrastructure going forward for years to come. And just knowing that this synthetic aviation fuel is, is basically built off of the air we breathe, that's right there. And it's just, you know, awe inspiring to just follow up for lack of better words, and I'm just really, really excited about the future and what it holds for zero petroleum. And I wouldn't be surprised if you know, government start to really, really get involved with contributions in, you know, given all kinds of tax breaks and opening up the door of assistance to see that this platform is firmly entrenched for years to come. Because this would enable the global initial, you know, this would seriously enable a global initiative to be completed by 2050 to be zero carbon free throughout the world. So congratulations to that team. I'm looking forward to hearing more many more great things to come as we watch you guys continue to develop and move forward. Jim Edgar Yeah, I think if I had to sum up the the entire conference, I think the word reassuring comes to mind. It wasn't overly optimistic. I think it was there was a realistic, sober approach. But But I was reassured and I didn't expect that going in, frankly. So Robert Luke I would definitely say sobriety was was the takeaway from from the event. Because, you know, even just from the first day when we arrived, you know, outside of the bleak outlook, when the crowds just looked like it wasn't going to be that great. And then it just slowly built up. It kind of is reflective of the current state we are in right now within the industry, it's going to slowly build up but it's going to build up and everyone else just needs to keep not only fate but patience and to continue working it one step at a time to bring it back to a level of comfortable through a comfortable generation of revenue and earnings and growth. So on that note, that's all that we have time for today. For more and more multimedia coverage like this, search cargo Facts connect on iTunes and Spotify and search cargo facts.com. Thank you very much for tuning in. And join us again next time. Subscribe to Cargo Facts Connect on iTunes or Spotify , or download the episode on Transistor . Stay up to date on all the news that came out of Cargo Facts EMEA 2023 this week here .

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