Gearing up amid global challenges

April 29, 2024

Virgin Atlantic Cargo is ramping up for a robust return to full capacity as it navigates the challenges posed by global uncertainties, with the introduction of new routes, showcasing its commitment to meeting the evolving demands of the air freight sector.

Dubai stands out as a key addition to the winter season routes, demonstrating strong potential for cargo operations given the region’s reputation as a global cargo hub.

Additional frequencies have also been incorporated into North America, with a focus on New York and Boston from Heathrow, and Manchester into Las Vegas, providing an alternate gateway for cargo movement from the UK into North America. The revival of the Shanghai route temporarily paused for obvious reasons during Covid, has already proven to be a success for Virgin Atlantic Cargo, given the growth of the e-commerce and pharmaceuticals market from China.

India has been a notable area of growth for Virgin Atlantic Cargo, particularly in passenger and cargo operations. Mumbai with daily and Delhi, with twice-daily flights, have demonstrated strong load factors and yield.

The Bengaluru route is expected to continue this trend, with a focus on manufacturing, apparel, and the pharmaceutical market.

“We finished 2023 really strong, not only the industry as a whole but us individually as an operator,” Phil Wardlaw, Virgin Atlantic Cargo’s Managing Director, said.

“Notably, our performance exceeded market conditions, particularly in the fourth quarter, and this positive momentum has carried over into the first quarter of the current year. As we are only 22 days into the month, the encouraging trend continues, and we find ourselves in a robust trading position.”

Global tensions

Looking ahead to potential challenges in the air freight sector for 2024, Virgin Atlantic Cargo acknowledged ongoing global hotspots, including challenges in the Middle East due to the situation in Gaza and the Ukraine-Russia conflict, disrupting logistical operations.

“When examining the macroeconomic conditions, it is evident that certain global issues are causing concern,” Wardlaw stated.

“However, setting aside these external factors, I remain optimistic that the market has regained a sense of stability. Barring unforeseen disruptions, I envision 2024 resembling the stability observed in the pre-pandemic period.”

Seeking to maintain stability and deliver for customers amid potential disruptions, the carrier is focused on providing a performance-led approach, continuously reviewing routes, segmenting operations, and being customer-centric, allowing Virgin Atlantic Cargo to make agile decisions in response to changing market conditions.

“Our commitment extends to maintaining strong relationships with our customers. Engaging in ongoing and open dialogue with them is a priority. This constant communication ensures that we stay well informed about market dynamics and any specific issues that may arise,” Wardlaw explained.

“As a result, we are consistently at the forefront of understanding the evolving landscape. This proactive stance enables us to respond promptly to emerging challenges, shifting our focus areas when necessary.”

Despite the potential hurdles on the horizon, Virgin Atlantic Cargo remains optimistic about the overall market performance in 2024.

“The air cargo industry has experienced fluctuations rather than a consistent period of stability. Initially, we were emerging from the heightened challenges of the COVID pandemic, marked by significant peaks in demand, fluctuations in yields, and capacity constraints,” Wardlaw outlined.

“However, the current scenario indicates a more balanced capacity landscape, as evidenced in the second half of 2023. Assessing our network and those of other carriers as we enter 2024, there appears to be a sense of relative stability, and I anticipate this trend to persist throughout the year.”Looking ahead to potential challenges in the air freight sector for 2024, Virgin Atlantic Cargo acknowledged ongoing global hotspots, including challenges in the Middle East due to the situation in Gaza and the Ukraine-Russia conflict, disrupting logistical operations. “When examining the macroeconomic conditions, it is evident that certain global issues are causing concern,” Wardlaw stated. “However, setting aside these external factors, I remain optimistic that the market has regained a sense of stability. Barring unforeseen disruptions, I envision 2024 resembling the stability observed in the pre-pandemic period.” Seeking to maintain stability and deliver for customers amid potential disruptions, the carrier is focused on providing a performance-led approach, continuously reviewing routes, segmenting operations, and being customer-centric, allowing Virgin Atlantic Cargo to make agile decisions in response to changing market conditions. “Our commitment extends to maintaining strong relationships with our customers. Engaging in ongoing and open dialogue with them is a priority. This constant communication ensures that we stay well informed about market dynamics and any specific issues that may arise,” Wardlaw explained. “As a result, we are consistently at the forefront of understanding the evolving landscape. This proactive stance enables us to respond promptly to emerging challenges, shifting our focus areas when necessary.” Despite the potential hurdles on the horizon, Virgin Atlantic Cargo remains optimistic about the overall market performance in 2024. “The air cargo industry has experienced fluctuations rather than a consistent period of stability. Initially, we were emerging from the heightened challenges of the COVID pandemic, marked by significant peaks in demand, fluctuations in yields, and capacity constraints,” Wardlaw outlined. “However, the current scenario indicates a more balanced capacity landscape, as evidenced in the second half of 2023. Assessing our network and those of other carriers as we enter 2024, there appears to be a sense of relative stability, and I anticipate this trend to persist throughout the year.

Digital Transformation

Responding to the increasing demand for digital developments in the air freight industry, Virgin Atlantic Cargo has undergone a significant technological transformation in recent years.

While digitalisation was deemed an optional extra until a couple of years ago, with the global cargo businesses lagging behind other industries in terms of digital adoption, recognising the changing expectations of consumers has transformed the industry’s approach to operations.

“Probably until a couple of years ago, digitalisation was an add-on, but it’s now vital if you want to grow,” Wardlaw highlighted. “We’re playing a 20-year catch-up game in the cargo industry and although the pace of change seems fast now, it’s more a reflection of how slow airfreight has been to start its innovation journey.”

Virgin Atlantic Cargo’s digitalisation journey accelerated in January 2023 when the carrier revamped its cargo management system, providing a solid foundation for future developments. While initially setting an ambitious goal of achieving 20% of digital sales by the end of 2023, the technological innovation implemented saw them hit this mark by November.

Visibility and transparency

Visibility emerged as a crucial aspect in the digital sphere, with Virgin Atlantic Cargo asserting that customer desire for transparency is clear.

“It’s kind of like in our own lives. As consumers, when you order something online, you want that visibility and ability to follow the whole process. It’s no different in the airfreight world,” Wardlaw explained. “Our customers want visibility, and we hear that loud and clear. There’s still a journey to go for us, but technology has been a huge enabler here.”

Looking ahead, Virgin Atlantic Cargo emphasised its focus on ongoing developments in the industry, particularly on achieving end-to-end visibility within the supply chain through partnerships with key stakeholders.

“There are others in the supply chain who still need to come on the journey, be that handlers, truckers, whatever it might be, to fill in that middle piece and complete the journey end-to-end. That’s where our next developments will be,” he highlighted.