Ethiopian Cargo's big ambitions

Ethiopian is undoubtedly Africa's top airline, unrivalled in efficiency and operational success. Its cargo division, Ethiopian Cargo & Logistics Services, is the largest cargo network operator in the continent and one of the major global cargo carriers with a modern warehouse at its hub in Addis Ababa. In the 2020-2021 fiscal Ethiopian carried more than 750,000 tonnes of cargo.

It provides freight services to its global customers in over 66 global destinations in Africa, the Gulf, Middle East, Asia, Europe and the Americas. It operates 12 dedicated freighters that include 9 Boeing B777 and 4 Boeing B737-800 freighters. In the strategic road map of Ethiopian - Vision 2035, Ethiopian Cargo & Logistics Services plans to be a full-fledged profit centre with annual revenue touching $2.87billion, have a fleet of 24 freighters serving 70 cargo destinations and to carry close to a million tonnes of cargo. Edited excerpts from an interview with Abel Alemu Yimer, Managing Director of Ethiopian Cargo & Logistics Services. He was appointed to the current role in December 2021.

Tell us how Ethiopian managed to keep its operations through the pandemic despite constantly evolving and challenging operating environment?
The pandemic brought real challenges for everyone in the world. I think every industry is affected one way or the other. But the impact on aviation was really tremendous. What we've done in 2020 at the start of Covid was to understand the demand of the time and we focused more on the cargo operation. Luckily we were prepared to certain extent, because we had made investment for the last 10 years on expanding our network, improving our warehouse capabilities and in our fleet. That helped us to grasp the cargo opportunity that was in the market. As a result of the belly capacity restriction we were quick to convert a lot of our passenger aircraft into freighters or P Freighter, as we call it. And using this combined fleet of aircraft we focused on transporting medical equipment to various destinations particularly from eastern side of the world. So in the last two years our focus, as an airline, has been pretty much on cargo.

Do you still operate P Freighters?
Yes, we still operate them. The capacity restrictions are different in different regions. There are still markets which are not yet open for a free movement of passenger travel. At the height of Covid, we had converted 25 of our passenger aircraft of different sizes into P Freighters. Right now we have around 13 of them in our fleet operating to different destinations.

Can you tell us how the cargo division performed in 2021? And how significant is the cargo revenue contribution to the overall annual revenue of the airline?
The performance was really tremendous. We had a very successful year in the fiscal year of 2021. We pretty much helped the entire aviation group. Ethiopian is an airline group that consists of seven strategic business units. One of them is the cargo division. So the revenue from the cargo business supported the rest of the business and contributed for the survival of the airline in this difficult time. So our contribution, I would say, is close to 50% of the airline revenue during this period.

Ethiopian is a combination carrier with a large wide body fleet with an international network, how much of your belly cargo capacity is back to the pre pandemic levels?
As of May, 70 percent of our pre Covid capacity has returned to the market. The only challenge at the moment is in the Far East and Oceania where most economies are yet to open for a regular passenger operation, besides China.

Can you give us a sense of the share of cargo on belly versus main deck as of now, and do you think going forward the famous global industry equation of 50:50 remain unchanged? And what is the ratio for Ethiopian?
The total ratio at this point in time could be like 40:60, 60 being the dedicated freighter uplift since we also operate 13 additional P Freighters. 40% seems to have recovered on the passenger routes that we are operating with wide body. Maybe once passenger recovery happens we would have the ratio of 50:50.

How important is main deck capacity for airlines like Ethiopian and how important is to create that main deck capacity for shippers going forward?
Main deck capacity is very critical for a particular segment of our clients. Of course, with cargo destinations and origins customers do prefer a certain type of capacity for moving cargo into different places. In Africa, there are four or five markets that we always consider the main deck type of arrangement. The rest can be addressed with a combination of both lower deck and other type of loadings.

What is the mix of your current freighter fleet?
We now operate nine B777 freighters and with the latest addition of a B737-800 converted freighter, we have in our fleet four B737-800s.

Earlier this year you placed an order for five more B777 production freighters. Do you have the clarity on the timeline of their deliveries?

Yes, the order was placed earlier in this year based on the strong demand for air cargo. Going forward, we would like to consolidate the current momentum that we gained in the air freight business. So the timeline would be from September 2023, all the way until 2025. So in two years, we will have all the five freighters capacities delivered to us by Boeing.

You also have a MoU with Boeing for five of its new generation freighter, the B777-8F, which is not expected anytime before 2028. How significant is this development for Africa's leading carrier to bring in such huge capacity?
We have been working with Boeing for the entire history of Ethiopian Airlines, which is almost 76 years now. So on all these years, we are taking the initiatives and leading the aviation industry in Africa by being partners to technology. So Boeing is developing these new machines mainly for cargo. So as usual, we would like to be at the frontiers of technology and then see the benefits of the new machines coming into our industry. The timeline is a little bit longer. But this is an industry that you plan ahead of time. So the memorandum of understanding with Boeing is on a general terms on how to work together once the details and other arrangements are finalized in due time.