Interview: project cargo flying high, but challenges lie ahead, says van de Weg

With project cargo experiencing something of a comeback, The Loadstar took the opportunity to talk with one of the sector’s leading lights, Robert van de Weg, Volga-Dnepr’s group vice president for sales and marketing.

The industry veteran said the past two years had been a boon, but there were still challenges ahead.

How has the project sector been in the past 12 months? Have you seen an increase or decline in business? What has driven this? What are the main challenges?

RvdW: Volga-Dnepr and AirBridgeCargo have both been specialising in charter cargo operations for oversized and super heavy cargo for many years. Charter flights are always a customer-tailored solution, starting from the choice of airports of destination and arrival, approval of exact departure and arrival times, flight permits, design of special loading equipment, in most cases, and other customer requirements for transport of very expensive cargo for costly projects.

Throughout 2017 and Q1 18, we have witnessed persistent demand for the project sector from such industries as aerospace, oil & gas and energy. The recovery and stabilisation of the oil & gas market has increased demand for oil and gas equipment.

However, there remains a high level of volatility, with fluctuation in demand, fuel prices and the major world currencies, not to mention continuing political unrest and environmental issues. These are just the few challenges to have a great influence on the air freight business around the world. It is becoming harder with every year to plan ahead, given these complexities.

That said, we favour a project approach towards our work with customers … in order to forestall and identify all their requirements. 

How are the types of jobs you’re taking on changing? Where is the demand coming from?

RvdW: With the latest technologies and digitalisation penetrating the air freight sector, the process of charter organisation has been simplified and takes less time now than it did back in 1990.

We see persistent demand from ‘traditional’ industries – oil & gas, aerospace, energy, automotive and humanitarian – as they are the main growth drivers for oversized air freight transport. Mostly it is bolstered by reviving oil and gas projects in different regions of the world, which require essential equipment and tools.

Another opportunity opens with the emerging number of aerospace projects – nano, micro and small satellites being transported to different parts of the world, with the unprecedented development of digitalisation, deeper utilisation of Internet of Things (IoT), which embraces more and more aspects of our daily life and leads to the increase of equipment like wafer-steppers needed worldwide.

And the humanitarian sector is always on our radar, as Volga-Dnepr has a proven track record of prompt response to any natural or man-made disasters. With changing environmental and climate conditions, weather gives us unexpected ‘presents’ in the form of hurricanes, earthquakes, floods and other acts of nature, which lead to damage control and aid and relief missions.

Is consolidation within the shipping sector affecting you? And which carriers are doing well in project cargo?

RvdW: The issue with airlines versus shipping lines is that consolidation is much harder to execute, due to ownership rules in most jurisdictions. This is a handicap for us since on the supplier side (eg, aircraft, aircraft parts, handling companies) and on the customer side (forwarders) the selling/buying power is ever increasing due to consolidation.

Are changing government attitudes – protectionist trade policies, threats of trade wars, etc – impacting the project sector?

RvdW: Surely protectionism will not be a good thing for global trade and hence not for our industry. So far, we are mainly influenced by economic factors, rather than governmental ones. For example, it is especially true for the oil and gas sector, which is highly volatile and dependent on investment flows into complicated oil and gas projects. In 2015, the oil and gas market went down, based on a drop in oil prices leading to the freezing of some oil and gas projects, which was mirrored in the drop of the sector’s business share for Volga-Dnepr.

Has demand for express capacity eaten into airfreight’s ability to cater for project cargo?

RvdW: In principle it is true that the higher the demand in the overall air freight overall market, the lower the aircraft availability is for project cargo. Having said that, our capacity is sufficient to cater for our key customers and target industries. Volga-Dnepr and AirBridgeCargo have always set high priorities for project cargo, reviewing every charter request individually and organising it in accordance with customers’ requirements.