Strategically placed

Megan Ramsay talks with Çelebi’s president of cargo, Cemil Erman, about expansion, emerging markets, e-freight and economic recovery

Founded way back in 1958, Çelebi’s activities in the ground handling sector are long established, but since opening its first cargo warehouse at Istanbul’s Atatürk airport in 2003, the company has been striving to become similarly well known and respected in the cargo handling arena.

However, its president of cargo, Cemil Erman, says the company’s approach is to focus on “strategic locations” rather than expansion for expansion’s sake.

“We don’t want to be everywhere because we believe that expertise is more important than just coverage,” he says. “We want to pick and choose strategic locations where there is at least the potential for good volumes.”

The first step in the expansion of Çelebi Cargo and Warehouse outside of its home market Turkey was the start of operations in Budapest in 2007; having rapidly grown its market share there, the company now handles about 92% of the gateway’s throughput, more or less controlling the whole Hungarian market.

“Next, we won a cargo concession tender in Delhi,” Erman continues. “There were two tenders open but we chose to go for the brownfield one because it gave us immediate access to customers. Delhi sees about 650,000 tonnes of Cargo and we handle about 500,000 tonnes. The greenfield complex has just been finished and started up recently.”

Part of the project there involved modernising the facility, which was struggling with “huge” cargo volumes. Erman notes that India’s imports and exports are growing again after experiencing a small hiccup in the past few months and he says Çelebi is ready to take on higher volumes in the future.

Back in Europe, the handler signed an agreement in early 2011 to take one of the last remaining cargo spaces within Frankfurt CargoCity Süd. The 20,000 sq metre facility is one of the largest warehouses in CargoCity Süd, with a capacity of around 220,000 tonnes.

“We’re currently at around 60% capacity and we’re already the number three cargo handler in the third-party market in Frankfurt, after just a year and a half,” notes Erman proudly. The next stop is Vienna Airport, a key base for eastern European traffic. “We recently bought Fraport’s ground handling operations in Vienna and we are in discussions with Vienna airport over a warehouse facility to begin with. This, together with Budapest, will be quite strategic as far as trucking and offline handling is concerned.”

Erman says Çelebi is also looking to expand its cargo handling activities into other major European hubs like Amsterdam, Brussels, London or Milan – and he believes there are possibilities for strategic partnerships with existing handlers. Beyond Europe, the company also has additional expansion plans, although these are under wraps for the moment.

Back in Turkey, he says capacity at Istanbul Atatürk airport is limited for cargo handlers, and while there is a need for development, there is simply not the space, with much riding on the construction of the city’s third airport, which will be put out to tender in September.

Airports that cater well to the needs of cargo handlers naturally tend to have high volumes, while other airports are often criticised for failing to provide for the needs of cargo, although Erman feels it is often unfair to compare airports directly in this simplistic way. “Sometimes there is the will but it is not possible to do what needs to be done due to space constraints and other factors,” he observes.

Similar factors also contribute to the variation in terms of the drive for e-freight, he believes. While it is relatively easy to introduce paperless processes at a gateway like Frankfurt, Turkey presents a very different scenario, with relatively strict Customs regulations firmly entrenched.

He adds, wryly: “There must be a lot of challenges because everyone has been talking about these topics for the last 10 years and nothing much solid is in place yet. But we have to adapt because air freight has to be fast, efficient and speedy.”

Meanwhile, there are broader problems to contend with. “Fuel prices are the biggest issue,” he says. “Air freight offers an advantage in terms of speed, but most cargo can be carried by cheaper alternatives. When prices go up, or in any crisis situation anywhere in the world, air cargo is affected more rapidly and recovers more slowly than passenger traffic. But then, in the last 10 years, cargo has grown at a higher rate than passenger traffic, so there is potential, depending on the fuel prices,” Erman considers.

The other major influence is, of course, the global economic climate. While recovery from the last crisis is taking a long time, Erman believes the future should be brighter than the last two or three years have been. He observes that individual markets perform differently under the pressures of a financial crisis, with some achieving growth while others lose traffic. Nevertheless, he notes that in today’s business environment, markets are very much interconnected, so that if, for example, there is a slowdown in the Far East, then there will be consequences in Frankfurt.

In addition, emerging markets have their own particular challenges, the first being a lack of adequate infrastructure. Customs formalities can often pose problems too, while a third issue is that emerging markets are often affected faster and to a greater extent by economic crises.

But in spite of these challenges, there are opportunities in these markets for bold companies. “You have to be a strategist and take risks where you see potential,” he says. “For example there are not many people setting up in India, but in the long run I think it will be an interesting market.”

He says that while financial power is valuable for handlers to succeed, it is more important to have a viable project. “If your project is sound and you have a strong financial background, then it is not difficult to get the financial backing to expand into these markets. It’s not just about the money though: spreading yourself too thinly is dangerous.”

Ultimately, it comes back to the issue of quality.

“You have to be in control because cargo handling is a service industry, and you have to offer your customers high quality of service,” he insists. “It’s important to have consistent standards, no matter where you are operating. We want to grow, but in a sustainable way, maintaining the quality associated with our prestigious brand.”