The move would boost its revenues as worries over declining global freight market

by SHAHEERA AZNAM SHAH/ pic by ARIF KARTONO

MAB Kargo Sdn Bhd (MASkargo) is broadening its cargo business into halal-certified service to cater for the expanding global Shariah-compliant food market.

The air freight subsidiary of Malaysia Airlines Bhd (MAB) said the move would boost its revenues as worries over declining global freight market, largely due to the trade war between the US and China.

CEO Ibrahim Mohamed Salleh said that the air cargo carrier had invested RM500,000 to modify its warehouse in Sepang, Selangor, to meet the Department of Islamic Development Malaysia’s (Jakim) requirements.

“We have also carried out various amendments to our processes including the documentation to get the certificate.

“Now that we are part of the halal supply chain, we want to ensure that the halal integrity continues from farm to fork,” he said at the launch of MASkargo’s halal service in Petaling Jaya, Selangor last Friday.

He said the freight carrier recognised the need of diligent handling of halal products and separation from the non-halal products “up to the door of the aircraft”.

In May 2019, MASkargo met Jakim’s requirements for the MS2400-Halal Certification, which recognised the cargo carrier as the maiden halal-certified air freighter by the religious authority.

“After more than two years working towards acquiring the certifications, we finally received the MS2400 Certification from Hakim for halal logistics service under warehousing activities,” he said.

The subsidiary of the lost-making see the halal cargo handling market as an opportunity based on the rising demand for such services.

“According to a report by the International Market Analysis Research and Consulting Group, the global halal food market value is projected to reach US$2.6 trillion (RM10.84 trillion) by 2023,” he said.

Ibrahim is confident that the service will contribute positively to the company’s top line growth and freight demand.

“Although the investment into this new business is not substantial, we are looking at a good return.

“We are at an early stage. As this is a new emerging and niche market, we are targeting to push our revenue contribution of the service from zero. We also hope that we could push up the air freight volumes with this new service,” he said.

When asked about MASkargo’s performance in 2018, Ibrahim said the air cargo carrier performed “quite okay” while seeing stability in its cargo volume.

“Volume wise, we are seeing the freight numbers to be quite stable. When the market goes up, hopefully very soon, we hope our freight number will rise as well,” he said.

Ibrahim also said the new service will impact cargo charges as it has been included in MASkargo’s newly raised charges effective Sept 1, 2019.

The carrier’s terminal charge (loose) at the Kuala Lumpur International Airport was increased from 25 sen per kg to 28 sen effective Sept 1. The rate will rise again to 30 sen on April 1, 2020.

For terminal charge (loose) at other domestic airports, the rate was raised to 22 sen per kg from 20 sen.

On the declining global air freight volume, Ibrahim said the company remained cautious of the falling numbers while planning to continue to innovate its business strategies.

“We are concerned because freight business is actually a very dynamic business. It is either you are following the trend, which is quite hard, or setting the trend.

“What we are doing here is finding new and fresh market and be the pioneer of the trend,” he said.

According to The International Air Transport Association data, global air freight markets showed that the demand, measured in freight tonne kilometres, dropped by 4.8% year-on-year in June 2019, signalling its eighth consecutive month of decline.

Ibrahim also said MASkargo plans to partner with more companies in the logistics supply chain for its halal service.

“We are looking at more new partners to collaborate, including our existing partners from the conventional cargo service,” he said.

At the event, MASkargo also signed agreements with Korean logistics provider Sejung Group, Nippon Express (M) Sdn Bhd, Labuan Halal Hub and Serunai Commerce to leverage on its halal-certified service.