Air freight is TGF's next step

Date: 19.06.2012

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Toll Global Forwarding reveals plans to increase air freight and sea-air capability in Asia and the Middle East

Air freight TGF's next step

By Anna Game-Lopata | June 19, 2012

Toll Global Forwarding (TGF) has revealed plans to increase air freight and sea-air capability in its Asian and Middle Eastern business.

The TGF team headed by CEO Hugh Cushing today told investors in Singapore
it sees gaps in the global air freight market and plans to fill them.

Global Air Freight Director Peter Troy says Middle-Eastern carriers are adding belly capacity at a staggering rate.

"There is a new generation of aircraft adding capacity, including the 747-8 Freighters and new pax aircraft," Troy says.

"TGF is mindful of the possible rate whiplash possible if demand quickly exceeds supply in this environment."

Meanwhile capacity is still greater than demand in most markets.

Troy says faltering demand as a result of the Eurozone crisis and slow US recovery is causing a volatile market in which both airlines and ocean carriers are reducing capacity.

By way of example, he says Cathay Pacific has reduced capacity by 25 percent to Europe and 15 percent to USA while Singapore Airlines is down 20 percent across the board

"In addition electronics product launches are causing volatility," Troy says.

Troy says the result of these market pressures is that Asia and the middle east are the main drivers of growth for TGF.

Given over capacity in air and ocean markets, TGF CEO Hugh Cushing says the business has been working hard on its underlying fundamentals since its launch in 2008.

"TGF is still on the journey initiated in 2008 – we are still building," Cushing tells investors.

"We are holding our strategic course in challenging market conditions. There has been a major focus on standardised IT systems rollout which will begin to deliver positive productivity improvements in FY13.

"Organic growth has been constrained by global market conditions, but we are well positioned for strong growth as economic conditions improve."

But Cushing admits planned business scale is yet to be achieved. "Acquisition opportunities are still being scoped in key target markets," he says.

"Expansions into new industry sectoring but remaining focused on our strong competence in retail. We are always looking for bolt on opportunities to fill out network gaps."

"Our key competitors operate extensive global networks providing global customers with global solutions," Cushing adds.

"The increased focus on lean supply chains has increased demand for value added services by forwarders at origin and destination.

"Our plan is for TGF to grow into a player of global significance in the international logistics provider and freight forwarding market.

"We will
build the foundation of our business in Asia with a focus on exports and a rapid build of scale through targeted acquisitions.

"We’ll maintain our rapid pace of IT development, and progressively improve margins through improved procurement and improved operational productivity."