Caspian Air Cargo Summit: Unlocking the potential of the Silk Road initiative
The eighth Caspian Air Cargo summit took place in Azerbaijan recently where unlocking the potential of the Silk Road was a key discussion.
Arriving at the state-of-the-art Baku Heydar Aliyev International Airport in Azerbaijan following a very smooth flight from London on board flag carrier Azerbaijan Airlines provided the perfect beginning arrival to the region and the eight Caspian Air Cargo Summit.
The summit, which took place on 8–9 October 2019 at the Fairmont Baku Flame Towers hotel and was organised by Azerbaijan’s national cargo carrier Silk Way West Airlines and Swedish company Euroavia International. They brought together 39 countries and over 200 top executives from leading global companies to discuss the latest trends for the air cargo sector.
Smooth operation
At the welcome cocktail reception in the hotel’s Gold Lounge, Lars-Gunnar Comén, director of Euroavia, welcomed the delegates to the well-established summit which was first held in Baku in 2006. This year’s event had a special focus on unlocking the potential of China’s ambitious Silk Road development, the Belt and Road initiative, for the air cargo industry.
As locations go, Baku is perfectly situated for an event such as this, with the country very much being part of the region that played an important role in the development of the original Silk Road.
Local air cargo carrier Silk Way West Airlines is certainly one to watch when it comes to ambitious operators planning to make the most of the opportunities the new Silk Road initiative will bring.
In September, the airline which operates a network of over 40 destinations with its 15 Boeing 747 full freighter aircraft, in September inaugurated a freighter operation from Oslo Gardermoen Airport to its global hub in Baku, and recently enhanced its service to India by adding a second weekly scheduled flight from New Delhi to Baku.
This offered the Indian air freight market more access to the expanding Silk Way West Airlines network to CIS, North America, Europe, the Middle East, Asia and beyond.
“In view of our constant strive to enhance our network, we aim to further develop the Indian subcontinent. The new service is just a part of our expansion plans in India. We plan to add at least one to two additional destinations in India soon,” stated Samir Shirin, the vice president for ISMEA region at Silk Way West Airlines.
President and CEO of Silk Way West Airlines, Wolfgang Meier, commented ahead of the summit: “In our aim to further expand our network and connect India with our global hub in Baku, we run this expansion plan in view of building a denser network along The Silk Road. We are excited to share our views on our future plans during the Caspian Air Cargo Summit in Baku.”
Headwinds
The air cargo industry has undoubtedly experienced some strong headwinds in recent months. In October, IATA published data showing that demand in global air freight markets, measured in freight tonne kilometres, contracted by 3.9 per cent in August 2019 compared to the same period in 2018, marking the tenth consecutive month of year-on-year decline in freight volumes.
According to IATA, global trade volumes are 1 per cent lower than a year ago, with intensifying trade war between the US and China, weakness in some of the key economic indicators and rising political uncertainties worldwide contributing to this.
The programme of the Caspian Air Cargo Summit acknowledged the changing environment in international relations and addressed issues caused by trade tensions, with Zaur Akhundov, president of the Silk Way Group, noting in his welcoming remark how important it is to openly discuss urgent and fundamental matters for the industry in events like this.
Silk Road progress
African carriers saw an 8 per cent increase in demand compared to the same period a year earlier – this was the fastest growth of any region in August 2019, IATA says.
The association noted how strong trade and investment linkages with Asia have established a significant increase in air freight volumes between the two regions over the past year, with China investing heavily in the African market.
This investment is part of China’s global Silk Road development strategy, the Belt and Road Initiative, which brings together countries in Asia, Europe, Africa, the Middle East and the Americas and involves infrastructure development and investments in 152 countries.
The Initiative aims to improve regional integration, as well as increase trade and stimulate economic growth.
Vladimir Zubkov, secretary general of the International Air Cargo Association TIACA, focused on the topic at the summit by exploring China and Azerbaijan’s relationship and noting how the two countries are deepening cooperation under the initiative, with Azerbaijan president Ilham Aliyev declaring some weeks ago that he is ready to take the initiative to a new height, supporting the country’s role as a regional transport hub.
Aviation will be an important part of the initiative, Zubkov continued, with China’s aviation policies supporting this by further deepening the reform of civil aviation, opening up airspace, optimising international traffic rights and competing in the aviation market through the use of capital.
Transforming Asia–Europe trade lanes
So, what does all this mean for the air cargo sector?
Focusing on the implications for the industry and whether the Silk Road Initiative will transform Asia-Europe trade lanes, Wolfgang Meier, president and chief executive officer of Silk Way West Airlines, expressed his thoughts, remarking that China’s ‘Go West’ strategy between 2000-2013 had a real impact on air cargo, bringing manufacturing to the western part of China and resulting in locations such as Chengdu and Chongqing prospering in the market and providing state-of-the-art infrastructure for air cargo.
Meier also explored the Digital Silk Road Initiative which is adding digital infrastructure to the physical infrastructure and boosting connectivity with developments such as China’s BeiDou-2 global satellite system which has been integrated into the Digital Silk Road initiative.
“China’s Digital Silk Road is a game-changer for prospering countries,” Meier stated, adding that Silk Way West is a perfect partner for the Belt and Road push, having a one-of-a-kind product formula and a network that meets the needs of the initiative with more than 40 unique destinations.
High expectations
Thomas Crabtree, regional director, airline market analysis at Boeing Commercial Airplanes, offered more insight into the CIS territory specifically and explained that in the region, domestic Russia is leading all CIS- related air trade, with air traffic concentrated in Moscow, Central Asia and Siberia.
“Transit traffic between Europe, East Asia and the Middle East is bolstering overall CIS carrier volumes,” Crabtree commented, continuing that the leading Russian airlines such as Aeroflot carry 80–90 per cent of total air cargo traffic.
“Freighters will remain the backbone of the CIS air freight transportation system,” Crabtree noted, remarking that the most popular freighter types in the area are IL-76, AN-12, AN-124 and 747F, and that Boeing expects the CIS region to require 1,280 new aircraft by 2038, valued at $160 billion.
Meeting the needs of e-commerce
When it comes to different areas of the business where the industry needs to stay ahead of the curve, technology is certainly one of them.
Glyn Hughes, IATA’s global head of Cargo who spoke at the event, reminded the audience that the air cargo sector needs to work closely with the growing e-commerce sector to meet its specific needs, and how it is essential to embrace digitalisation, advanced automation and robotics technology.
Bruno Sidler, group COO of investment company Lonrho Group, remarked during the same panel discussion that a great example of companies doing this already is the Deutsche Post DHL Group which in October this year announced it will be spending around €2 billion on digitalisation by 2025.
Opportunities for the industry
The summit featured a robust agenda filled with thought-provoking discussions on topical issues and opportunities for the region. Several key players in the air cargo industry attended the event, including West Atlantic Cargo Airlines, which specialises in tailored aircraft solutions for global integrators, national mail organisations and other B2B e-commerce suppliers with both ad-hoc and long-term demand for cargo aircraft.
West Atlantic’s chief commercial officer Russell Ladkin commented on the last day of the event: “It has been a very productive and enjoyable few days. Azerbaijan is an important region as a commercial bridge between the East and West and this, together with key development strategies such as China’s Belt and Road initiative, can provide huge potential for air cargo in the future.”
Visit caspianaircargosummit.com for more information.