SAS Cargo is taking a cautious outlook on the future as it, like the rest of the air cargo industry, waits for economic and geopolitical calm, its top officials told Asia Cargo News in an interview in Copenhagen.
The carrier is now working its way back to moving the same volume of goods as it did pre-pandemic, but it still has some way to go as it is hampered by problems, particularly on the eastbound trades.
SAS Cargo is keen to stress it hopes and expects Asia will open up further. Officials stressed that despite the challenges the airline faces, it is committed to Asia.
In 2019, the airline moved 111,000 tons, but in the past two full years, it struggled to reach half that number with 50,000 tons, including non-scheduled passenger or cargo charters, in 2020 and only a slither more at 51,00 tons last year.
Currently, the airline is steadily getting back to pre-pandemic levels for cargo volumes, which are now around 60% of pre-pandemic levels.
While the U.S. market, aided by flights to medical hub Chicago, has largely returned, Asia has not yet rebounded, much to officials’ dismay. Asia is a market in SAS and is keen to expand its capacity.
Blocking that expansion is two significant problems: Two of the airline’s three Asian destinations, Beijing and Tokyo, are still suspended post-lockdown (although Shanghai remains open), and Russia’s war on Ukraine and the closure of Russia’s airspace means the route to Asia from Northern Europe is lengthier and costlier.
That said, Shanghai is doing “very good” business, Anders Hundahl, SAS Cargo’s regional head of sales for Asia, reported.
A lot of fresh fish and seafood are moved by SAS Cargo, along with medical technology items and spare parts. On the return legs, where business is also “very good”, the airline primarily hauls mixed e-commerce, fashion goods and “a lot of electronics,” said Hundahl.
The company, though, is still keen on expanding in the Asian market.
“We are applying for increased frequency on a regular basis in China. So far, nothing has been permitted. We have the commercial basis for it, but it’s very difficult to read the Chinese authorities on when they will start opening up,” said Hundahl.
SAS Cargo also sees Japan opening up soon, and this would be another market keen on Scandinavian seafood, he added, with the return expected to be electronics and automotive spares.
“Right now, our focus is to resume and ramp up our frequency to the to destinations we served pre-Covid, Beijing, Shanghai and Tokyo,” Hundahl said.
Behind that are economic problems: high fuel prices and a particularly sharp version of the strong dollar, especially against the Swedish krona, which makes fuel dearer still.
The krona is the official reporting currency of SAS even though it is exposed to the U.S. dollar for costs such as fuel, explained SAS Cargo CEO Max Knagge.
“The detour and the losses connected with that hit us hard. That, plus high fuel,” said Knagge.
For this reason, the carrier is cautious about the scale of the usual fourth-quarter rally – and when, exactly, it might occur. “We still plan for a peak, but it might be a bit later than usual,” added Hundahl.
Longer term, SAS is still cautious. Knagge believes fuel prices will remain high and that there is going to be increased capacity coming into the market. Once the current uncertainty is over, and conditions are right, SAS plans to move. “Our ambition is to increase capacity,” Knagge said.
Part of the problem facing the airline is it has no dedicated freighters, and at the moment, the airline is flying only nine of its 14 widebodies. Its cargo operations rely to a considerable extent on passengers who are not moving yet.
“We’re all waiting for Asia to open up,” said Knagge.
SAS has not wasted the time it has been confined to base. It has moved on with the digitalization agenda and has been pushing the sustainability agenda. There is a new product being worked on here with an announcement that this is “just around the corner”, said Knagge.
Longer term, it is looking for opportunities, and while it has noticed some business relocation as global supply chains shift, it has not seen any loss of business. There is a feeling that the changes are nothing it needs to accommodate.
Closer to home, there is the emergence of the idea not in Copenhagen but also across the bridge that Malmo, Sweden, might make some kind of ‘medicon valley,’ – just the sort of thing that drives air cargo.
By Michael Mackey
Correspondent | Copenhagen
