Air cargo revenue is expected to increase 5% to $116 billion in 2019, despite potential escalations in a US-China trade war, uncertainty surrounding Brexit (the UK is scheduled to leave the European Union in around 10 weeks) and a volatile oil price, according to IATA. The cargo sector has enjoyed a strong two years, with demand increasing month-on-month, and cargo carried exceeding investor forecasts.
For Zaragoza Airport (ZAZ) in North-Eastern Spain, a boost in cargo means the Spanish city is fast becoming one of the world’s most important air cargo hubs.
In September 2018, Zaragoza became the second busiest Spanish airport for cargo operations, overtaking airport cargo giants including Barcelona, which benefits from both dedicated cargo flights and passenger flight cargo from a vast international network. Geographically, Zaragoza sits in the middle of a Madrid-Barcelona-Bilbao triangle, while being situated close to several main cargo ports.
Zaragoza’s local government will now invest a further 25 million to keep the ball rolling and boost the international cargo capacity through new infrastructure and facilities.
In September, Zaragoza handled around 16,908,000kgs of cargo, while Barcelona handled 14,818,000kgs
What’s behind the boost? Zara the popular Spanish clothing brand (named after the city of Zaragoza) with hundreds of stores worldwide, is playing the largest role in terms of exports.
Inditex is the parent company of Zara, and also owns Spanish fashion brands including Pull & Bear, Massimo Dutti, Bershka and Oysho.
While the majority of the world’s clothes and garments originate solely from Asian countries, Inditex has grown to become the main customer for all cargo airlines in Zaragoza. Cargolux, Air China Cargo, Ethiopian Airlines Cargo, Emirates Skycargo, AirBridge Cargo, Qatar Airways Cargo, Turkish Cargo, Saudia Cargo, Korean Air Cargo, and Atlas Air are the cargo heavyweights expanding their presence at Zaragoza, purely to meet the demand for exportation of Inditex-branded clothes.
Zara, the most popular of the Inditex group brands, is driving air travel cargo growth through the Spanish region in numbers exceeding expectations of investors, and government financial forecasters. With their main distribution and logistics centre established at Zaragoza, the brand relies on having its merchandise flown all over the world, by airlines not specific to either the origin or the destination.
For example, Ethiopian Airlines Cargo has now increased its Boeing 777 Freighter frequencies to Zaragoza in order to carry Inditex textile products (notably, Zara stock) to the Americas. These flights will not touch Ethiopia, and is merely a revenue opportunity for an African carrier with cargo aircraft, ready to help supply meet demand.
“In line with our strategic roadmap, Vision 2025, we will keep on expanding our cargo destinations worldwide, thereby facilitating trade and economic growth among different regions of the world,” the CEO told media.
“If you’re a Zara shopper, you’ll know the stores’ stock is updated in approximately 2/3 week cycles. These cycles in which new clothes are introduced to Zara stores worldwide is key to the growth of Spain’s cargo sector, which is largely contributing to the positive cargo results reported worldwide, over the last two-year period.”
Even airlines without a dedicated cargo division airline are working to take a slice of the cargo cake, and forecasts for 2019 have highlighted how cargo revenues will represent over 13% of airline revenue – a significant portion, given airline margins are smaller than ever, tickets are the cheapest in years, and the 2018 oil price has wiped off profits at even the most profitable airline carriers.
This year the industry opened over 1300 unique city-pair connections (essentially, previously unserved, direct routes) with a fresh opportunity for cargo and passenger travel.
While Zaragoza looks set to continue its growth, and potentially soon become Spain’s dominant cargo airport, the same cannot be said for the worldwide cargo outlook for 2019. Air cargo growth is expected to soften in 2019, mainly due to a global slowdown in world trade, which in turn will hurt volume and yield performance.
However, not every market will be affected. Specifically, Spain and South American countries are set to strengthen, even if Asian export markets are slowed due to President Trump’s tariff war.
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