Things are looking up for National Air Cargo as it has moved in recent years to better realign its business, creating a more diversified set of product verticals, its joint venture with RSA Logistics in Dubai and more recently the start of a fleet expansion with three more B747-BCFs to come. By Donald Urquhart from Air Cargo Europe 2019.
Clearly there’s a light at the end of the tunnel, and it’s getting brighter all the time – a welcome relief from a pretty tough run for the US-based carrier and freight forwarder. “It’s been very flat for a number of years, Jacob Chacko director of Commercial Operations at National Air Cargo says, if but a little understatedly, “but it’s started showing some signs that it’s going back up,” he adds.
Of course, these are tough times for everyone in the market, so it may well be just a little bit longer before National can truly claim to be coming up roses, but the momentum is none-the-less clear.
National, which is celebrating 29 years in business this year, is an unusual example of a freight forwarder becoming a carrier. Not many examples of this exist in the industry and given the market conditions in the last decade, it’s probably unlikely any other intrepid companies will take the same path.
The Orlando, Florida-based National has for quite a number of years been heavily involved in US military cargo contracts, something that left the company vulnerable to the winds of change in US military policy. While this reliance has been reduced, National still relies on military contracts for nearly 70 per cent of its business, with the remainder a mix of commercial business.
Certainly, a game changer has been the joint venture with Dubai-based RSA Logistics in a new air cargo terminal at Dubai World Central (DWC). RSA has the largest footprint at DWC with some 500,000 sqm. The first phase of the terminal which is 12,000 sqm features in-house police and customs and focuses on the freighter traffic at DWC, of which Emirates is the obviously the key player.
Chacko notes the new facility, directly opposite Emirates SkyWorld Central, was completed last year in July with a soft opening in September. “We are not a ground handler and the ground handler is still dnata,” he notes. “We do acceptance, build up and all that. So we have to have a new product which needs to be there.”
Now the effort is going into finalising the solutions that will be offered. He notes the facility is ideal for e-commerce, brining goods into the Middle East and North Africa, because Emirates has got the connectivity alongside all the other freighters flying into DWC provide substantial capacity. “And there’s a great trucking network to other parts of the Middle East,” as well, he adds.
With National’s freight forwarding business ticking along nicely, Chacko says that on the airline side, National is undertaking a fleet expansion to add to the current two B747-400BCFs currently in the fleet.
“In principle we have bought three more freighters which are the ex-Cathay Pacific freighters and the first one we’re expecting it to be operational by beginning of August and the second one towards the end of this year, with hopefully the third one by the second quarter next year.
Going forward the new aircraft will be a key development for National, not just because of the added capacity and flexibility, but because of the all-important backup in case of an AOG. “That will be a big game changer in terms of our consistency,” he adds.
“It’s a phased approach, we don’t want it to come all at once,” he says. “And of course, we’re keeping a close eye on the China-US the trade issue.” Chacko notes that the carrier was doing “extremely well” from China to the US last year, “and maybe for the last three years it’s been very good”. This was largely charters from CGO to Chicago.
“We also did some flights back-and-forth from San Diego to CGO with cherries and we did Halifax – live lobsters to both PVG and CGO and also Hong Kong and then from Hong Kong we fly back.” These are continuing despite the trade tensions and business is good he adds.
But there is no escaping the impact of the trade war. As Chacko notes if you look over a period of three to four months it’s something like 120 fights that get affected, “but luckily we’re operating out of Vietnam now into the US which is a good market,” he says.
Currently National operates a regular charter out of Hanoi, with the possible addition of Ho Chi Minh City down the road. “We’re also looking at some kind of year-round programmes where will embed with one big customer and do kind of scheduled charters, like maybe three flights in a week back-and-forth between the US.”
The carrier is still active on the passenger side as well, having a few years back adding this to the portfolio. Currently it operates two B757 aircraft for passenger charters, both military and commercial for groups such as sports teams in the US. Chacko notes the airline is looking to replace them with more modern aircraft, with two A330s expected to come onboard by end of next year at which point the fleet is expected to consist of five B747-400s and two A330s.
As far as its stations are concerned, Chacko says the Frankfurt office is seeing a pickup in momentum in commercial activity, while earlier this year National opened a Shanghai office basically for charters. The Hong Kong office remains busy and over in Kuala Lumpur, the office there takes care of both commercial and military, for instance, military exercises taking place in the Southeast Asia region are supported from that office.
And as far as further expansion goes, the company is scoping out the potential for a greater presence in Africa. “We are looking at what we can do more there both on the logistics side and on the flying side,” Chacko adds.
Another key development for the carrier is a greater push into industry verticals. “There’s a certain amount of oil and gas equipment that we move both on the charter side and on the freight forwarding side,” Chacko says.
Alongside this is general cargo and garments. “We’ve been fortunate in the last year because we’ve done so many flights with fresh food and vegetables and live seafood like the lobsters. We also do AOG parts, as well and on the charter side we do some pharma transport out of India into the US, so we are spreading a little bit into multiple verticals and that’s a positive move,” he says.
“We still have our regular scheduled services from Dubai into Afghanistan – a weekly B747 freighter mostly, or an MD-11 (third party provider). We do DWC into Bagram in Afghanistan and also to Kandahar,” he adds.
The RSA JV
Meanwhile, the other key focus will be on getting the Dubai facility up and running with a new product. “Ultimately the link up with RSA, we would like to expand into other areas, maybe into Africa first and then into other places,” Chacko notes.
RSA already has a cold-chain facility in Dubai which is certified and up and running and they have a unique chemical facility in Dubai. And aside from the new DWC facility, RSA also has a warehouse facility at the Jebel Ali Port. “This offers a lot of flexibility,” Chacko says. “There’s a lot of redistribution happening where everybody wants to bring goods into one place and redistribute.”
Dubai is becoming a important node in this redistribution, with much potential in the immediate Gulf region, but also further afield into Africa. And here is where National can play a key role and certainly its important joint venture with RSA may feed into this, something Chacko highlights as a prime potential for National going forward.