Until 30 years ago, cargo carried by airlines consisted mainly of hand luggage and passengers' suitcases stowed down in the aircraft's belly. In 1946 -Cathay Pacific Airways' first year of operations - it carried only 15 tonnes of cargo that did not belong to the passengers.

But as cargo volumes kept growing, the company recognized that there was a real demand that needed to be properly fulfilled. The first major step towards a dedicated air cargo service came in 1975, when they converted one of their Boeing 707s into a freighter. Four years later, at the same time as they acquired their first Boeing 747 wide-body passenger aircraft, their annual cargo volume rose to 86,200 tonnes. At that point the management began to think big, which resulted in the acquisition of the airline's first B-747-200 freighter. But of equal significance was the commencement of a dedicated Hong Kong-Frankfurt-London-Hong Kong cargo service, done as a joint venture with Lufthansa of Germany. The rest, as they say, is history.

As cargo volumes kept growing, the company introduced the CUBIC cargo booking system in 1984, acquired a second B747-200 freighter in 1987, and then hived off its cargo operations into a separate division under the Cathay Pacific Cargo (CPC) name. The cargo business now accounts for around 28% of Cathay's total revenuesÐwhich has also enhanced Hong Kong's position as the world's busiest air cargo hub.

The organisational imperative

Cathay Pacific Cargo currently has a fleet of 12 Boeing 747 freighters: seven B747-200s and five B747-400s. That's an impressive fleet, but CPC moves around 80,000 tonnes of cargo per month - and around half of that is carried in the bellies of the company's 75 passenger aircraft.

"The massive flow of cargo now carried around our network requires a high level of information technology (IT) support to ensure shipments are correctly assigned and arrive at their final destination on time," says CPC Director & General Manager Ron Mathison.

All this is handled internally by the Cathay Unisys Booking and Information for Cargo (CUBIC) system, which has become an integral part of Cathay Pacific's fully computerised cargo service. There are more than 426 CUBIC display units in more than 65 sites across Cathay Pacific's network. Each air waybill can be booked on a selected date and sector with instant confirmation of space. Once booked, the cargo's journey is recorded at every stage, through departure and transshipment in Hong Kong to arrival at final destination and delivery to the consignee. Cargo agents can immediately determine where their shipments are at any given time, and cargo details can be forwarded prior to departure for pre-arrival customs clearance at the final destination.

CUBIC's efficiency was further boosted. In April 1990, when Cathay Pacific joined forces with Air France, Japan Airlines and Lufthansa to establish a global logistics system, which provides fast and accurate cargo information and logistics support to the air cargo industry worldwide. Twenty-five cargo-carrying airlines are now interacting through the system to distribute cargo to different parts of the world.The network accounts for the bulk of the world's airfreight carrying capacity.

Ezycargo

Further developments include the launch in September last year of a pioneering online booking service, Ezycargo, a co-operative effort between Cathay Pacific, Singapore Airlines, Japan Airlines and Qantas of Australia. Ezycargo allows online access to the various partners' cargo services, and various functions on the site streamline the whole process from checking schedules to booking, to paying for and tracking shipments. This offers significant savings in time and labour because now a single operation can process a shipment travelling via any combination of carriers in the group.

Ezycargo is the first multi-carrier IP booking portal in Asia, and one with grand ambitions. GF-X and CPS portals primarily serve Europe and America respectively, Mathison explains, but "we (Ezycargo) are leading in Asia".

Now the world's fourth-largest cargo carrier, Cathay Pacific is expected to ship one million tonnes of cargo at Chep Lap Kok this year, equivalent to about 40% of the airport's throughput last year. How did they manage to get there?

"With a lot of knowledge and expertise on how to service the market, reliability and quality of service," Mathison insists. "We take reliability and safety very seriously. That's very important because we handle a lot of dangerous cargo, and our record for that is excellent. But perhaps our key selling point is our Hong Kong base and the network we provide."

The technical edge

Airfreight carriers need a large network to offer a wider choice of destinations and faster delivery times. Cathay flies to 31 countries and has collaborations with many other partner carriers and trucking companies.

"If you're a shipper, the airline's network, range of options and time to market is very important," Mathison explains. "We get the cargo to the destination faster than most carriers to and from Hong Kong and we have resilience in the schedule if something goes wrong."

This capability is aided by IT, which Cathay first introduced in the early 1960s when the increasing popularity of mass air transport strained the carriers' data management capabilities. "It can safely be said that airlines were among the first to embrace computerisation, especially for their passenger reservation systems," Mathison says.

As the Internet became widely available through the World Wide Web, it drove the need to move operations online to cut costs and to improve efficiency and interconnectivity - both within the company and for customers. Cathay took the easy way out by migrating from a local area network (LAN) to Internet Protocol (IP) in a single step, the first airline to do so.

Switching to IP offered several advantages, including allowing access to shipment information at each stage of the journey. As one local supply chain manager put it: "In each package you can have a complete and instant history of the customer destination travel path and other essential information."

This can even include access to diverse information ranging from customs agents through to bankers, thus helping both carriers and customers enjoy the same speedy access to their vital shipment information.

According to Mathison, being online also brings internal benefits to their entire operation, including reduced phone and fax costs, less paper work and processing, and increased staff productivity.

"For example, we use the same internet technology - IntraCX - for our internal intranet," he notes. "We have a staff travel listing and check-in on that, and we encourage our staff to do more self-service with a view to reducing internal inefficiencies."

Guardians at the gates

But what if it all goes wrong and a shipment gets diverted? This can be a very serious problem for market-sensitive shipments, or perishables.

The Cargo 2000 quality assurance programme, to which Cathay conforms, sets up check points which raise the alarm when cargo goes astray, allowing prompt corrective action. "If something is originally routed to, say, Paris, and we send it to Brussels, we can then truck it on and it will still get to its destination in time," explains Mathison.

He is so bullish about e-commerce, which now accounts for more than one-third of Cathay's cargo bookings, that he wants to see that volume boosted up to at least 80 percent. "That's our aim so we're very much committed to using e-booking channels with a view to further cutting costs," he said.

But making the switch to high-tech solutions can be fraught with problems. As many a company knows to its cost, getting the right technology and the technology right can be an elusive process - and getting it wrong can be a very costly mistake.

Mathison believes that business should be the driver, not the technology. "In e-business the key word is 'business' not 'e', and it's a matter of making sure you're clear about your business objectives," he maintains. "I think problems have arisen when companies have lost sight of their original business objectives and how they make money."

Mathison says that for e-business to work, management has to recognise that this technology leads to overlapping traditional departmental roles, and they then have to adapt accordingly. "A lot of it is about implementation and the deployment of technology, project management and how to deal with the classic challenges of technology that doesn't observe traditional departmental functional divides."

He adds that there's a need for airlines and other businesses to work in a much more cross-functional and collaborative manner. "Ironically, it's that manner that's in turn enabled by the technology itself," Mathison believes. "But there's quite a big change in management process that you need to go through as an organisation to get the best out of the technology."