Tom Owen, director at Cathay Cargo, the ATW Cargo Operator of the Year, talks about what it takes to be at the top of your game in the complex but vital air freight sector.
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Transcript
Karen Walker:
Hello, everyone, and thank you for joining us for Window Seat, our Aviation Week Air Transport podcast. I'm ATW and Aviation Week Network Air Transport Editor-in-Chief, Karen Walker. Welcome on board. Now this week, I'm delighted to be joined by Tom Owen, who is the Director of Cathay Cargo. Tom, thank you for joining me from your base, in fact, in Hong Kong. So thank you very much indeed. Great to see you.
Tom Owen:
Thanks, Karen. Look forward to it.
Karen Walker:
Now, Cathay Cargo, of course, is part of the Cathay Pacific Airways Group and Tom is going to talk about key focus areas and investments in Cathay Cargo. But first of all, I must congratulate you, Tom, and Cathay Cargo as you have just been named the 2025 ATW Cargo Operator of the Year. Congratulations and very, very well deserved.
Tom Owen:
Thank you. We're very excited by that actually. It's a nice accolade to get from the industry and I think it reflects all the hard work that the team have been doing over the last few years, so it's nice to have this internal recognition. Been a pleasure. Thank you.
Karen Walker:
Well, like I said, very, very well deserved. In fact, I was in Hong Kong not that long ago, earlier this year with you, and you very kindly showed me around the Cathay Cargo hub over there and it was really impressive. So you're definitely very deserving of this award.
Now, what I'd just like to do with this conversation is just start off on a more sort of general look at the wider air cargo market. You're an expert in this. Can you just sum up for me how you see the market going this year in general, globally in Asia, and for Cathay, of course, but what's your feeling for the market at the moment?
Tom Owen:
Yeah, absolutely. I mean it's not surprising, is it? The word everyone would use is uncertain. I mean cargo at its best of times is uncertain, but particularly this year with the geopolitical situations and with the US administration change and the impact that may or may not have in terms of air cargo with regard to tariffs and e-commerce, it leads us to have quite a challenging time in forecasting and understanding where the flows are going and exactly what shimmers are going to continue to happen.
What I can say is that we are continuing to be very agile and very flexible with both our capacity deployment and also our sales focus around the world. And I think in some ways, the COVID crisis of a few years back really helped us hone that agility because it really is very, very fast changing and I think you can talk to five different people and everyone has a slightly different view as to exactly what's going to happen. So, uncertain and I think still remains to be seen what exactly is going to transpire for the second quarter and third quarter of the year.
Karen Walker:
Let's talk a little bit about Cathay specifically now, and Cathay Cargo. Talk a bit about the fleet. You've got the Airbus A350 freighter coming in. Just talk a bit about that, but also your fleet in general.
Tom Owen:
Absolutely. Yeah. So, we are very much an integrated carrier with 20 dedicated 747 Boeing aircraft, which are pure freighters. And then we have over 200 wide-body aircraft as well, which carry significant amounts of cargo in the belly. So we're very much focused on that. We have about 60% of our capacity comes through the freighter and the rest comes through the passenger belly side.
We've got orders for six firm and 21 purchase rights for the next generation A350 freighter, which we're very excited about. That's going to allow us to expand our fleet to over 26 freighters and we will be operating a mixed fleet with the Boeing and the 350 and deploying both aircraft on appropriate routes to benefit the economics, particularly of the 350, which are, with two engines, significantly better than the older technology, but still very reliable and very airworthy 747.
So we're looking to grow that way. We're also looking to grow with our passenger belly. We've launched eight different destinations already this year on the passenger side and more to come next year and the years ahead. And we're aiming to grow at just about half to three quarters of the overall market cargo, so we're able to benefit from being in the busiest air cargo hub in the world, which is Hong Kong. And it's very great to be in this location. A lot of transit cargo comes through here and obviously the foot of China, we benefit from that as well.
Karen Walker:
Absolutely. So when do the A350Fs start to arrive?
Tom Owen:
So the current forecast is for either the end of '27 or early '28, and we're going to be taking in rapid succession up to six. And then we'll be through the second half of the decade starting into 2030 and 2031, swapping out and replacing some of our older 747s while the -8s, which are the younger version, we've got 16 of those. So we're going to be able to keep those for a lot longer because they are very effective workhorses for us, particularly on the Trans-Pacific.
Karen Walker:
Right, absolutely. So that's a lot of capability there. When I was in Hong Kong, I also sat down and talked with Ronald Lam, obviously the Cathay Pacific Group CEO. He mentioned something that I thought was quite interesting, and he was talking relative to the A 350 freighter, but he was saying that because obviously you've got A350 in the passenger side already operating, and he was saying about the ability for the flight crew, so the pilots to be able to do both all freighter and all passenger.
Tom Owen:
Yeah, absolutely. That's going to be certainly a benefit of the A350, the interoperability of crews, and that will give us much more flexibility when it comes to operating these aircraft on passenger and freighter routes as well. The other big advantage is around the environment, between 20% to 25% more fuel efficient per payload ton carried than the existing technology. So that's also a real step change and helps us in our goals to decarbonize and realize a more sustainable future for air cargo. And finally, I think there are advantages in terms of the noise footprint that are given out by the freighters in terms of Hong Kong and other airports around the world where increasingly, people are concerned and are getting tighter with restrictions in those areas. So some big upsides for sure.
Karen Walker:
And again, while I was there, I saw some other very interesting aspects on the cargo side of what you're doing with sustainability. So I'd like to come back to that as well because there were some real interesting things there. But let's just talk about the key focus areas for Cathay Cargo. As you say, you've put a lot of investment, new technology, et cetera, and you've really been very agile and adapted. I mean cargo has been an important business for Cathay pretty much all along, but what I saw at your hub, I mean you've really nailed it in terms of being able to leverage both your position and then investing. So tell us a bit more about that.
Tom Owen:
Well, our vision at Cathay Cargo is a very simple one. It's to be the best air cargo carrier in the world, and that's what we're trying to achieve. And we've had a plan there for the last four and a half, five years of investment backed up by the board in order to try and move us towards that aspiration. I think there are probably two or three things that we've learned pin the overall strategic approach, and you've mentioned one of them already, and that's the digitization of our operations. And it's a huge subject and it's a significant investment, which requires not only understanding where the best opportunities lie in investing in data and then digitizing that information and then building applications and new systems, but also relies on getting new people that are up to speed on digital technologies, on AI, and on other areas which historically cargo hasn't probably attracted in the same way as maybe the passenger side has.
And then finally, in the organizational side of that, how you organize to deliver continually evolving technologies. So for instance, you can't just have the traditional project approach where you have a team and you have steering groups and you have an output. You need to bring people together in different departments in a much more agile, much more systematic way, and continually innovate and progressively release new incremental improvements. So there's, around the digital side, lots of change, and I could go, there's a long list of applications we put in place, whether it's on the customer side with websites and booking engines, and whether it's on the people side, whether it's around our own applications to help manage the operation internally or whether it's around data, thinking better to our customers through direct linkages and APIs or through application to IATA ONE Record messaging technology, which allows us to be more secure and takes paper out of the whole process. So there's a whole raft of things there, and it's a big and exciting area, and one we're very, very proud of.
The second area of focus has been around trying to differentiate ourselves from the overall cargo market. So we've been investing in our solutions, we have nine different solutions, and we're essentially relaunching all of our solutions based on customer feedback, improving them, iterating, making them better, and then doing the same again. And we've relaunched a whole range of solutions over the last couple of years. Our latest one to launch is Cathay Fresh, which is all around transporting fresh products, fruit and veg, fish, lobsters, all those sort of things to the world and how we can do that.
And that links to our third big focus, which is around operational excellence, trying to really deliver what our customers really want. And when we cannot do that, explaining why and fixing it quickly. And that covers all of our solutions. It covers a whole range of digital initiatives and also covers extensive retraining of the teams around the solutions that we are proud of delivering and getting our IATA CEIV qualifications for all of the various solutions we can is also a big step. Plus working very closely with our own cargo terminal that you mentioned. That's a very important piece as well.
So, those three areas are really important. And I think finally a thing to say is we've tried to raise our awareness of our brand by investing in our stories, telling stories about the amazing things that our people do every day in terms of transporting goods around the world. We have our brand saying, "We know how," our motto if you like, and that really has become a bit of a mantra internally with the pride of our people and links right back to the ATW award actually, which is a huge accolade and we're very proud of that because everyone in our company works extremely hard to deliver that. We now have brand promise to our customers and I think being recognized through this award has been a real dose of energy for us. So thank you for that.
Karen Walker:
That's lovely to hear. I hope you don't mind my saying this, but obviously I've been covering this business, the overall air transport business for a long, long while and my fault, but I typically tend to think that the cargo side is like the more boring side.
Tom Owen:
Oh, shame on you, Karen. Shame on you.
Karen Walker:
I knew you'd react to that, Tom, and I have to say that that tour, you really bring alive just how good and how much good the cargo side does. And just frankly how fascinating it is, especially when you're making the sorts of changes that you're doing, thinking about tying everything in together is complicated. But yeah, I just realized, wow, this is a really important side of the business.
Tom Owen:
Yes, you're right. I think COVID brought that out obviously in many ways. And it's slightly amusing to me actually how people were saying, the experts were saying, "Oh, suddenly cargo is being rediscovered and is getting a seat at the C-suite." But the reality is, of course, it was always there. And certainly in Cathay, we started as a cargo carrier back in 1946. That's how we started out, and passengers came second. So for us, it's always been an absolute core to our business strength and underpins our results for the last five years, particularly during COVID, but also even now, strongly. So, yes, it's an exciting business for many reasons. I think if we have a purpose in Cathay Cargo, it's to carry cargo that matters to the world. And we really believe that the stuff in the cargo terminal, whether it's a widget or a live horse or whether it's a bit of e-commerce or an important part of an oil rig, all has a vital part in people's lives delivering results and businesses. So it's a real tangible part of the world economy. That's why we all get excited about air cargo in cargo.
Karen Walker:
Yeah, absolutely. Again, the variety of things that I saw going through the Hong Kong hub, it's just incredible, everything from sort of caviar to Tasmanian cherries.
Tom Owen:
Yes, that's right.
Karen Walker:
So another focus area, and it's because of the sorts of investment and because you said it, your mantra of, "We know how," you've also focused a lot on high value cargo, specialty areas that often it could be a panda, it could be a racehorse, it could be a work of art or something like that, but which needs special care. And I saw some literally quite cool things that you were doing to do that. And tell us a little bit about that and the cool dolly. Explain the cool dolly.
Tom Owen:
Yes, yes. So the cool dolly is rather a fancy word for essentially a large air-conditioned box that moves between the aircraft and the cool room or the pharma room, which ensures that the temperature envelope is never breached in terms of cargo that requires active cooling.
And that's an example, I suppose, of a cold chain that you see it around the world. But certainly within Hong Kong in the hot summers, making sure we have absolute integrity in our cold chain is vital for many different types of customers, whether it's Cathay Pharma or whether it's Cathay Fresh, which is, as I talked to you about before, the product, it needs to be temperature controlled.
We've also got our own internal tracking device around temperature and light and humidity and even pressure actually, and it's called Ultra Track. It's our bespoke technology and you can purchase that or add it to your freight to track and give us real-time information that we can then communicate back to you from our 24/7 control center. So we're able to, if things in the very unlikely event do go wrong, we can quickly fix them and sort things out again.
So I think that's a particular aspect. We also carry, we have a product called Cathay Expert, which is around carrying really complicated bits of equipment, really long oil pipes or very, very multiple ton heavy pieces of machinery, performance cars or, I mean these sort of things need really special handling, special strapping and tying down, special loading and unloading. And that's another really good example of the skills that you need to build in if you are able to do this sort of stuff.
And finally, we've got among the nine solutions, another one which we've recently relaunched called Cathay Courier, which is in between e-commerce and the integrated DHL, FedEx and stuff, this is like express mail for small SMEs, door-to-door working with our partner Linex. And we can get small documents quickly to various regions in the world in combination with Linex and their partners and obviously Cathay Cargo doing the long haul flying, the actual cargo. And that's all digitized, track and trace at a piece level and the labels are printed off and you can send this stuff around. So, just a few examples of some of this special cargo that we do. It's around 30% of what we currently sell.
Karen Walker:
Wow. Yeah. And that makes it fascinating work for the people who are working with Cathay Cargo because you're just dealing with all these different types of things that have got to get from one place to another.
Tom Owen:
Absolutely, yes.
Karen Walker:
Can you just also talk on the safety side, again, some of the technology that you've invested there. I'm thinking particularly about monitoring lithium batteries, which is quite in the news at the moment. What are you doing there?
Tom Owen:
Yeah. So this is obviously, and it has been for a number of years, the number one operational safety risk for the whole airline, Cathay Pacific and obviously Cathay Cargo, primarily because there is a concern that if you do not handle lithium properly, there could be untoward fires and other things, which cause obviously significant problems.
We've, over the years, made sure that we have a very robust system in Hong Kong around an agency program, we call it the Cargo Agent Operating Program, where we actually, along with the Civil Aviation Department and the airport authority, have a range of facilities where we monitor the x-raying of all our shipments that leave Hong Kong to make sure that they do not contain undeclared lithium batteries. And that program has recently been enhanced using AI imagery, which will pinpoint denser pieces of shipments that may or may not be undeclared lithium, and allows us then to go in and check. And obviously if we find stuff, there are penalties and protocols to make sure that the agent does not do that again, or the facility is able to catch things like that.
So, there's a robust system around that. And in addition to that, within our own terminal, we're currently working on thermal imaging to allow us to actually look at the ULDs or the built up cargo into the middle of the entire pack to see if there are any hotspots developing that may or may not then evolve into potential fires in the future. So, that's another piece of work we're doing, which is quite innovative, quite leading, and I think will give us further peace of mind really that what we are carrying, we know what we're carrying, because when we know it's lithium, we can actually use our fire containment covers on the shipments. We have fire containment containers as well, so we're able to work with it and carry it safely. But it's when you don't know what's been put on, and that's the big issue and that's what we've been working tirelessly to try and make sure that those issues don't arise.
Karen Walker:
Good to hear. And so it's additional layers of security that you're adding there, and then you touched on it earlier and I said I'd like to get back to the sustainability side because, again, yes, you mentioned about things like the A350 and all that that brings on that side, but you've got a lot of initiatives as well on the ground, particularly like the recycled pallet wraps. Tell us about that.
Tom Owen:
Yeah. So we've got a number of things around the world actually. We try and work... First of all, I say that within our own terminal in Hong Kong, we have a lot of control, so we can really push these programs hard. One would be the plastic coverings on our cargo to protect it from the weather. You absolutely need that. We now have 50% recycled plastics and I'm pushing that hopefully to 60 and in a closed loop. So it all goes back in and is recycled again, it comes back out again. So it's a closed loop, 50% to 60% recycled and that's had a significant impact.
We've also reduced our waste around wood pallets very significantly. We've introduced separately for tractors, vegetable oil fuel, which is like the SAF of the ground I suppose, and many other small and large initiatives to try and improve ourselves in the ground. We've just been a few months ago awarded the IATA IEnvA, which is the IATA program around the environment. And it's an accreditation which shows the world that we've got measures and systems and processes in place to improve our sustainability credentials on the ground.
I think I'll also mention, in the air, of course, that's the big issue and we continue to focus on our sustainable aviation fuel program. We were the first major operator in Asia to launch such a program where customers, both on the passenger and on the freight side, can purchase SAF or sustainable aviation fuel from us. We obviously get great discounts and price breaks because of the scale we have. We can then sell that on to our partners who can then claim that in terms of their own environmental credentials with their own investors and their own stakeholders. So that's another big one that's been very successful.
And we also have our carbon offset programs currently, which we call Fly Greener, Fly Greener Cargo and Fly Greener Passenger. That's where you can actually offset your own carbon and those funds go into accredited gold standard carbon offset scheme around the world that we invest in. So, there's a number of things we're doing. I think the new technology though, the 350s and others will be also an integral part of achieving our vision to be basically carbon neutral by 2050.
Karen Walker:
So, again, a multi-pronged approach and also one that you can measure. You've got the statistics to say, this is what it's achieving. I think both of those things are important.
Tom Owen:
Yeah, it's right up there, Karen, as one of the... We're aiming to certainly be a regional leader in sustainability and there's a huge amount of work going on, both short and long term to make sure that's the case for us.
Karen Walker:
Tom, your enthusiasm for your work shines through. You obviously do really enjoy this air cargo world that you're in. Is it possible to say the one thing you most get out of it, why you most enjoy it?
Tom Owen:
Probably not one thing, but I think if I was thinking about that question, it would be the same in many things in my life. It's the energy of the people around you, you work with, right? And we're absolutely so fortunate in Cathay Cargo to have some amazing people. And I know every company says that, but really, I really feel it in Cathay Cargo because you've got some, you met some of them in the terminal, Karen, just people who just go the extra mile with this real can-do, positive, progressive attitude to their work. All age ranges. You've got people been there for literally 47 years and people who've been there for one year and that culture of, you're just making things possible in cargo really shines through and is an inspiration to me every single day. And nothing is too difficult for these guys and we're just very fortunate to have great teams.
And I think they also get excited, as you pointed out earlier, by the actual job. And although, yes, on the face of it, you're pushing boxes around in the terminal, but if you look slightly wider as to what you're actually doing, you are really contributing to the world economy and to people's lives. And Cathay, we have an overall brand ambition in Cathay to move people forward in life, right? Which is a very high aspirational view of what an airline can do, literally, as well as metaphorically. And I think air cargo definitely moves people's lives forward in different ways. And so, yeah, those are some of the reasons why I get excited about working in cargo for sure.
Karen Walker:
Well, I certainly felt that energy among your people there, definitely. Lots of smiles, there was people just really, really enjoying what they're doing and, as you say, believing that they're playing an important part in the economy and in people's lives. Fantastic to see.
Tom Owen:
Yeah, we do. We've just got our annual top customer awards, so top internal awards for dealing with customers, and I think you're going to see the Cathay Cargo team feature quite prominently in that because they've won several awards just because of what they've managed to do in terms of influencing the customers. So we just, as you mentioned earlier, we've carried two pandas from China to Hong Kong and that was a high profile, massive symbolic event, and the team just did absolutely magnificently within it. So I think we're going to get full recognition to those guys for what they actually did, and there's so many other examples, it's wonderful.
Karen Walker:
There's not much more special passenger than a panda.
Tom Owen:
That's very true.
Karen Walker:
That is a first-class passenger. Tom, thank you so much for your time, again, and also congratulations again on being the recipient of the ATW Cargo Operator of the Year. We've just heard, again, another glimpse of why it's so well deserved. So, thank you for your time and thank you also to our producers, Guy Ferneyhough and Cory Hitt. And of course, a huge thank you to our listeners. Make sure you don't miss us each week by subscribing to the Window Seat Podcast on Apple Podcasts or wherever you like to listen. This is Karen Walker disembarking from Window Seat.
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