PODCAST: Teleport CEO on freighter fleet growth

Jeff Lee
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 Jeff Lee, editor of cargo facts and it’s Friday, July the 14th. Earlier this week, I was in Kuala Lumpur, Malaysia, where AirAsia and its logistics venture teleport held a launch event for the first freighter of their own, an EFW converted a321 P2F that had arrived about two weeks ago. And it’s the first of what the company hopes could be a pretty sizable fleet of Airbus narrowbody freighters. I caught up with teleport CEO Pete Chareonwongsak to hear a bit more on the company’s vision.

Jeff Lee
So Pete, first of all, congratulations, we’re standing here in the hangar looking at your first a321 P two F.

Pete Chareonwongsak
It’s pretty cool,

Jeff Lee
It is pretty cool. Congrats. It’s been a long time coming, hasn’t it?

Pete Chareonwongsak
It has Yeah, we’ve spoken about this since basically the start of the pandemic. So I think to be able to make it happen. And after the pandemic, I think it’s not too late. So I think it’s important for us right now to show, I think, the cargo world that the network that you need going forward post pandemic is going to be some sort of hybrid network between belly space and phrases that can connect really ecommerce. I mean, that’s really the story. So if we really can make it happen, where it’s really affordable and cheap and fast, right, because it plays on a plane in Southeast Asia. I mean, I think, you know, we’ve got an opportunity for a big, big, big fleet. But look, we’ve got to prove it first. So this is the first one. I mean, literally, it’s sitting here and I can calculate how much is burning on the ground. So I want this thing flying tomorrow. So it’s flying tomorrow. So that’s where we are. It’s actually flying tomorrow. It is flying tomorrow. first commercial flight, it is Yes. Where’s that it’s going to East Malaysia, because the aircraft is so new, that it needs international permits. So while we wait for that, we don’t waste. We don’t waste time, we fly to East Malaysia. So actually, some of our customers were here. And I was literally saying to them, Hey, you know, we’re gonna see you on the plane, right? Like your stuff is gonna go on that plane tomorrow. So that’s what we’re trying to do.

Jeff Lee
And then when do you expect those international permits? And where in the world

Pete Chareonwongsak
2 weeks? It’s about two weeks? So look, I mean, the great thing about e commerce right in this part of the world is we’re four hours away from where all of it is manufactured and imported to China. So honestly, there is no reason why everyone in Southeast Asia could not receive what they order directly from factory floor to customer door and 24 hours, there’s no reason. And so I think we want to make that happen. So look, look out for us.

Jeff Lee
Right. And I think we can safely say that we will be seeing your freighter, well, this one and the following ones in China, Hong Kong,

Pete Chareonwongsak
For sure. I mean, that is literally going to be the first international flight Hong Kong. And then maybe we can do Guangzhou and maybe Shenzhen. So I think you can imagine already that we’re not reinventing the wheel here, we’re just connecting directly, you know, from China, to kind of different parts of Southeast Asia direct, you know, normally it goes through hub and spoke, it gets consolidated in various kind of key China hubs. Now, if we can fly straight there and fly back to where we want to deliver it to the consumer, you’re just fly direct point to point. So that’s what we’re trying to do.

Jeff Lee
So this first one is registered in Malaysia, the second one is also registered in Malaysia. It’s coming in a month or so. What about the third one?

Pete Chareonwongsak
Look, I’m pushing the team to consider Indonesia Philippines. I mean, I think I think freighters need Firstly, they need the belly market to be also robust. But more importantly, because they can connect right between freighter you can consolidate, you know, through kind of bringing the belly space to distribute or to kind of bring to a specific kind of flight for the freighter or the more than anything else you need a domestic market to to make a freighter really work. So these are the two markets that were air is about 25% of the total ecommerce that’s moved. And so you really need to think about the domestic markets of Philippines and Indonesia. But my sleeper hit is the Philippines. I think there were loads of questions today from the media about Philippines. You know, our number one route by volume, like in the whole group, we’ve got 1000 routes is Davao Manila. So you know, that tells you kind of where we’re going. So the Philippines is my sleeper, but it takes a lot, you know, the infrastructure has got a support, you know, moving ecommerce Express clearance. You know, I’ve lived and worked and run an airline in the Philippines. It’s not easy. But I think if that’s the market opportunity, then we’ve got to make it happen.

Jeff Lee
Right. I mean, that’s kind of your one of your advantages is you have so many AOCs

Pete Chareonwongsak
Yeah we just drop them in an AOC that makes sense. And we can move them around. We can move them around, you know, so I think people that are not in the space don’t truly understand yet how you can use an ecosystem like capital A and AirAsia but still kind of, you know, work towards a time of logistics that is separate by so really, you know, in the best of both worlds, you know, capital A benefits for being a share. have order of hours. And we benefit from their ecosystem because it’s truly it really is, you know, the lowest cost one of the lowest cost airlines to operate an Airbus. So why wouldn’t you operate a fleet of freighter Airbus to do pilots of the same I get pilots all the time knock me in the hallway nowadays and say like, look, I’m really looking forward to flying, because I don’t have to make any announcements. And I’m like, yeah, oh, cargo doesn’t talk to let you know, unless it’s like a live horse or something. So other than that, you know, it’s pretty common cool in there. So they can fly and they can fly back and they can, you know, do what pilots do. So look, you get to share all that the spare parts, you know, the permits, the up specs, like everything is just so quick to undock the plane. So it’s a truly incremental cost, right. So if people understand that in the in, you know, in, in your kind of listeners of the podcast, they will understand that we’re serious players, and we want to make this happen.

Jeff Lee
Right, but one of the challenges is, is having to undergo that certification process in the different jurisdictions? How big a challenge Do you see that?

Pete Chareonwongsak
I think it’s just a matter of time. So for example, when you know, AirAsia, inducted, you know, only the 320 CEOs, then we inducted the NEOs and then we inducted the 321 Neos, and then you know, we did the 330s. I mean, everybody knew them. So, you know, we used to inducting, various type specific aircraft on air, but now, it’d be different if we were indicating like a Boeing 737 400 F, or something that’s completely different. Like, we would be, like starting from zero. But I think in this case is truly we have to know how to operate these things like we are. And we know how to operate these things with a single engine taxi out, like we know how to do packs off takeoff. So we, we understand this piece of metal, you know, like nobody else. So look, I think, hopefully we can show it rather than me tell you on a podcast, but, you know, check back in with us in a couple months. Yeah.

Jeff Lee
So speaking of the fleet, of course, the initial plan was for three. But that’s not all you’re planning, is it?

Pete Chareonwongsak
No. Look, I’ve said I’ve said a number that everyone looked at me like. So I said, 100? You know, I looked at JD, I looked at JD logistics. And I said, Look, these, you know, these guys have ambition, like they’re thinking about a plan till 2035 with 100 aircraft and, and look, our big test is going to be can we grow the market, if we can grow the market, you can adopt more than the 10 freighters that we have in our business plan. So the key is, if you bring the cost down, if you have that hybrid network, you deliver point to point you’ve cut out all the wastage. And then you kind of just deliver for small packages which most airline and air cargo operators like. It’s not worth it for them. It’s it’s finicky. It’s small, they’d rather carry big things across continents if we can do this right in Southeast Asia. And I think we can grow the market.

Jeff Lee
Right? And are you looking to work with different lessors or the same one?

Pete Chareonwongsak
Look, whatever we you know, the ecosystem gives us an introduction to every single vessel, like I was just joking with one former CEO, who just retired, I know if you saw him have a set world’s second largest vessel. I won’t name names, but I think you do the research. But I think the point is that we just have a front row seat to conversations with these guys. And so at the end of the day, the cost of capital has gone up, you know, the world is changing, freight rates are down. So they’re only going to, you know, kind of do deals with people that they believe, have a sustainable future. And so I think what helps them understand that is they understand intimately the airline infrastructure that we ride on top of. So when they understand that the conversations become a lot easier, so we can talk to a lot of different vessels. But obviously, we benefit from talking to a few where there’s just a lot of scale. Right? So you know, we’ve taken, we’ve taken, you know, these three freighters from a specific level that does a lot of business with AirAsia. And so I think for that we benefit, right?

Jeff Lee
On a relate note, I was gonna say you’re taking on freighters at an interesting time when other people are removing them.

Pete Chareonwongsak
Absolutely. lowest cost wins, right. So, you know, there’s nothing lower than belly cost on a low cost carrier, operating short haul network. And so I think the key here is, how does the freighter complement that? So a simple example would be if I was to fly this thing tomorrow, which I’ve told you I need to fly this thing tomorrow to make money, then do I have the load already? Well, I do because I’ve been putting it on my belly network. And I’d be putting it on third party airlines in the lead up to this razor. So literally, tomorrow, I know how full this plane is going to be. And so that’s the power of inducting. This when you have a belly network, in a market like Southeast Asia, where it’s all islands, it’s all inter, you know, inter kind of cross border traffic. It’s small package focus. And so you can literally lift your cargo that you were, you know, moving on your belly, onto the freighter free up capacity in the belly, fill it up again, and then rinse and repeat. And that’s our model.

Jeff Lee
One last quick question. You want to dominate the skies, at least in Southeast Asia. Are you going to do that with just narrowbodies or?

Pete Chareonwongsak
I mean, we’ve got to do what we’re good at. And I think you know, we’re good at the narrowbody business. We’re good at moving things within Southeast Asia. I’ll never say never. But I think we’ve got to prove that we can do this thing right before we think about you know, taking on more boys more skies. To be on the ASEAN, you know, size that we want to dominate. So look, let us prove it, I think I believe Logistics is about showing not telling. So let us do that, let’s prove it makes money. Let’s prove that, as you said in a falling yield environment, falling market environment, where everyone else has higher cost that they enjoyed in the pandemic, you know, kind of ability to kind of continue to fly where we could, let’s throw that we can grow in this environment, and we’ll see where we go.

Jeff Lee
Well, best of luck to you and congratulations again.

Pete Chareonwongsak
Appreciate. Thanks for coming.

Jeff Lee
Thanks so much Pete.

Pete Chareonwongsak
Appreciate your patience. Thank you so much.

Jeff Lee
And that was Pete chareonwongsak, CEO of teleport. Thanks again to Pete. And that’s all for today. For 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.