The past year has been eventful for Singapore-based handler SATS – and the company continues to look ahead, says Alex Hungate, its president and CEO
SATS has been growing over the last while, with an expanded geographic presence, new services and development in adjacent businesses. Hungate explains how, and considers what the future might hold.
Q. How have you expanded your geographic coverage?
Leveraging our cargo handling expertise, we formed a joint venture (JV) with Oman Air – Oman Air SATS Cargo – to provide cargo handling services at Muscat International Airport. In addition, we ventured into Saudi Arabia and became the first international cargo handler to be awarded a cargo handling licence to operate in Dammam. These add to our growing network in Asia and the Middle East and will enhance connectivity for our cargo customers across the region.
Q. And what about your service portfolio – what’s new there?
We have developed new innovative services to provide value-add for our customers and partners. We opened our second perishable handling facility – AISATS Coolport – in Bangalore. This extends SATS’ cold-chain network, and reinforces our strategy of enhancing connectivity for our customers across Asia. It will also provide a secure end-to-end handling solution for perishables moving within our cold chain network.
On top of this, SATS also launched a secure, temperature-controlled, quality corridor between Singapore and Zurich with our partners Swiss WorldCargo (SWC) and Cargologic (CGL). SATS and CGL have synchronised their cargo handling facilities and procedures to deliver the most accurate, reliable handling on the ground and in the air, with full paperless cargo acceptance processes that enhance visibility and transparency for shippers. This offers SWC’s customers an assurance of the highest standards in cold-chain handling, and helps promote the carriage of pharmaceuticals and other temperature-sensitive air freight on the Singapore-Zurich route.
On our Food business, we announced that we were the first airline caterer to house a team of international culinary consultants. Named ‘SATS Culinary Consultants’, the team further improves our ability to offer airline customers high-quality, differentiated Asian selections, both traditional and contemporary. This will enhance flight experiences as passengers can get to enjoy authentically Asian and international gourmet dishes on board.
Q. Can you tell AGS a bit more about the adjacent businesses you mentioned?
SATS has also branched out into … travel retail through the formation of a JV with DFASS in Singapore. The JV will provide in-flight duty-free and duty-paid sales, offer mail order and pre-order service, supply liquor for in-flight pouring services, and operate ground-based duty-free and duty-paid retail sales in Singapore.
Q. How would you say the ground handling market in your region has changed in the last 12 months or so?
Reports have indicated that passenger volume in Asia is expected to grow strongly and airports in the region are adding capacity to meet the growing demand. Air travel is projected to increase dramatically by an extra 1.8 billion passengers by 2034 in Asia with Chinese travellers leading the growth.
Food demand in Asia will more than double by 2020, to nearly US$3 trillion a year, while food consumption in China will more than double to around $1.48 trillion by 2020.
Asia Pacific is also the largest retail e-commerce market with the region seeing fastest gains worldwide, and sales expected to top $2.3 trillion in 2019. Rapid growth in the number of Internet users buying digitally for the first time, as well as the increasing disposable incomes in China, India and Indonesia, are fuelling the majority of the region’s growth.
Specifically for e-commerce, we have just unveiled SATS eCommerce AirHub, becoming the first ground handler in Asia to operate such an automated airside facility. Spanning 6,000m2, our e-commerce facility houses state-of-the-art technology, multiplying our mailbag processing capacity by more than three times and streamlining mail sortation processes to deliver quicker turnaround for international e-commerce mail. This results in a 50% reduction in processing time, and enhances competitiveness of the whole air freight industry in Singapore by offering greater speed and transparency, as well as higher capacity to handle future growth.
Q. What else is changing in the industry?
Aside from these three macro trends, we are also seeing a rise in the low-cost carrier (LCC) segment, and we expect for it to continue growing. LCCs require difference services from full service carriers, but we see opportunities to leverage the volumes that LCCs bring. With the culinary expertise, customer touch points and strong innovative capability that SATS has, we are able to work closely with our partners to offer differentiated services, and value-add by coming up with innovative products to increase ancillary revenue.
In addition, there is an increasing push towards passenger check-in at common-use self-service kiosks. In Singapore, SATS has worked closely with the aviation and airport authorities as well as our airline customers to implement the Fast and Seamless Travel (FAST) check-in initiative. We have also provided support to facilitate the smooth transitioning from checking in at the counters to using the self-service kiosks. In addition, we have made efforts to ensure continued high levels of customer service that Singapore Changi Airport is renowned for.
That all sounds very positive; what about the difficulties handlers face?
One of the biggest challenges we are facing, which is also prevalent worldwide, would be the tight manpower market. As we grow scale, we seek to harness technology to alleviate the manpower crunch, increase our productivity, improve quality of our food and services and optimise our resources through job redesign and upskilling.
Another challenge we are facing would be the intense competition and pricing pressures. However, we continue to work closely with our customers and partners to develop new innovative solutions that can provide them with value-added and differentiated solutions.
Q. Can you say a little more about how and why you’re harnessing technology?
The use of technology has allowed us to increase volume without increasing cost proportionately, leading to an improvement in margins and productivity.
We deploy the smart use of technology to deliver efficiencies. In December 2016, we announced that we were the world’s first ground handler to deploy smart watches in ramp handling. This helps to streamline and automate on-ground processes and communication, and allows us to reallocate resources for greater efficiency. The smart watches are paired with bone-conductor headsets via Bluetooth, and this enhances safety and ease of collaboration.
Another example of technology adopted in our operations would be within our large central kitchens, where we have automated our tray assembly line with robotics, and implemented an intelligent, automated cutlery sorting and packing system. We also announced that we would be incorporating a new production line within our kitchen by the second quarter of 2017. This new production line will include automated sauce and ingredient dispensers as well as robotic wok paddles – speeding up soup, sauce and rice production and part of its dishing process. The new system will be capable of processing food on a large scale, which will in turn enhance consistency in taste and quality as well as further reduce labour intensive processes.
We have also used technology to facilitate job redesign. An example would be our SATS one-stop eAcceptance initiative, where we digitised the cargo acceptance process, and also simplified the process from 18 steps to 8 steps. Through this, we were able to optimise our manpower resources by combining the duties of both counter office and truck dock staff, and deploying our extra manpower elsewhere.
In addition, technology also helps us upskill our people. With the launch of our state-of-the-art automated SATS eCommerce AirHub facility, we implemented comprehensive training programmes for the team to pick up additional skills, enabling them to confidently manage the latest mail sortation technology and implement the new integrated process for sorting of e-commerce mail. Also, the team is now able to perform new functions and enlarge their job responsibilities, enhancing their careers through broader experiences within the business.
Q. What is your outlook for the rest of 2017?
In the coming year, we expect the operating environment to remain challenging with global economic uncertainties and competitive pressures in the aviation business. The progress that we have made this year has laid a strong foundation for us to capture opportunities that we are seeing in the region: increased air travel; demand for high-quality, safe food; and increased e-commerce.
We will continue to seek growth in three areas: improving organic growth in our existing portfolio; leveraging our expertise and building out our core businesses in Asia and the Middle East; and building up complementary adjacent businesses to diversify our business and create new revenue streams.
At the same time, we will also continue our focus on innovation through the introduction of technology and robotics in our operations to enhance productivity and improve quality of our food and services, as well as the development of new initiatives that will create value for our customers and partners.