Q&A With Ram Menen
Ram Menen is a Natilus advisor and member of the company’s founding team. Well known in the industry as the head of the cargo division of Emirates Airlines, he is also a founding member of TIACA (The International Air Cargo Association as well as Past President, CEO and Chairman of the Board.
As an experienced specialist in freight cargo, what is the current environment of the air cargo industry?
Air cargo has always had a very strong relationship with the world economy, and world air cargo growth tends to be roughly twice the growth of world GDP. Since the economic crisis of 2008, the industry has experienced some real fluctuations. However, beginning in 2020, this sector came into its own during the COVID-19 pandemic with revenue and yields setting unprecedented all-time highs.
Today, as the pandemic subsides and passenger capacity is redeployed, global economies are also affected by the Ukraine/Russia which has conflict plunging the world into an energy crisis. Yields are now on a downward trend, yet we predict the growth pattern will soon revert to normal. I see the yields getting back to the pre-pandemic levels in the next 2-3 years, and as margins get tighter, costs would be back in focus.
The good news is that the air cargo industry will be a growth industry for the foreseeable future, led by demand for e-commerce and the need for supply chain cost optimization, even with changes in procurement and production pattern. The industry is also challenged to reduce its dependency on China, by in-shoring/offshoring, air cargo. E-commerce will continue to grow in double digits while traditional cargo is likely to grow in lower single digit for the next 8-10 years.
How does this scenario affect Natilus?
This is where Natilus, with its lower operating cost per freight ton kilometer, will have a great advantage and add value to the cargo operators. In addition, Natilus is a purpose-built freighter, so its ‘no contours’ profile will optimize the capacity utilization by virtually eliminating loaded space loss factor. New operational efficiencies will also bring fresh cost benefits on the ground. Since Natilus will have large cargo doors and is a blended wing body design (BWB), it will be ideal for long and large/heavy cargo and will be a good replacement for B747F. The volumetric capacity of all the variants are very e-commerce friendly and ideal for low density cargo.
What is your assessment of the impact of the current pilot shortage on the air cargo industry?
Pilot shortages are likely to continue well into the next decade and we need to remain prepared to limit disruptions. Unmanned operations will lower the risk of future unknown challenges as unmanned operators or remote pilots will not need to deal with crew time limitations and can operate longer haul flights to get higher asset utilization than traditional airplanes, while lowering costs.
Are there any transport segments that you know of in which cargo is trucked to a regional airport rather than using a nearby airfield that could be served by Natilus?
Road feeder service (RFS) trucks are currently the best regional freighters for cargo operators. The Kona N3.8T freighter initially will be in direct competition with trucks for the 500-700 km range. However, Kona N3.8T will have distinct benefits where routes have large segments of water crossings or mountainous areas where trucks generally struggle to get through. Autonomous air cargo comes into its own where road infrastructure is poor and there are stringent border restrictions which can add delays to RFS.
Are there routes not being served today that could be fulfilled by Natilus?
Since the cost of operations for Natilus is lower than existing freighters, it will be more viable than ground freight in deployment on lower density traffic routes. The N3.8T is ideal for regional operations into remote and hard to reach places. All variants of Natilus will be very good for relief operations. Customized variants can also play a niche role in growing firefighting segment, especially as an unmanned vehicle, it could go into lower altitudes than manned aircraft and be more effective in putting out the fires.
Natilus has publicly announced its commitment to sustainability, and in particular, to designing aircraft and furthering new fuels that lead to lower carbon emissions and more economical operations for clients. What are your thoughts in this arena?
Natilus’s design and lower fuel burn per ton kilometer will go a long way in lowering carbon emission levels. Sustainable Aviation Fuels (SAF) will further improve emission levels. In addition, the N3.8T might benefit from a hybrid electric propulsion system, and hydrogen technology in the not-so-distant future.
Where do you expect the greatest growth in the worldwide air cargo business within the next decade and why?
The markets are very unpredictable at the moment due to the geo-political volatility worldwide. However, in the long term, I still see Asia Pacific (including China)-U.S. being the largest growth market internationally. Though there is huge growth in China and India, the U.S. domestic market is likely to continue to remain the biggest consumer market. China still controls the major percentage of raw materials (especially rare earth elements), so even if there is a shift in manufacturing/production activities, procurement of raw materials and components are still going to be from China. Africa and Latin America will also be high-growth markets, while Europe will tend to be riding a bit behind these continents. Trade between China-Africa, India-U.S., Asia Pacific/LATAM are all going to see continued growth in the next 10 years. The rebuilding of Ukraine will also have a positive effect on the cargo industry.