CORRECTION: The headline has been updated to reference Cathay Pacific, not Cathay Airlines.
- DHL inked a deal to serve as the third-party logistics (3PL) provider for Cathay Pacific and Cathay Dragon’s storage, warehousing and domestic transportation of aircraft maintenance parts, Air Cargo World reported last week.
- Hong Kong International Airport (HKA) houses Cathay, where DHL will perform service. Approximately 80,000 aircraft parts, components and equipment are used in the ongoing maintenance of Cathay Pacific and Cathay Dragon’s fleet of 180 aircraft.
- To properly service Cathay, 120 DHL Supply Chain 3PL specialists will work all day every day of the year. The parts which they will access are spread throughout 90,000 square feet of warehousing.
Perceived as resistant to change, Cathay Pacific is believed to be conservative in method and only reluctantly adapting to changes in the market — but this new deal with DHL may change that.
DHL is a highly successful logistics provider making leaps and bounds in logistics innovation: the company is already testing the Effibot, an AI robot cart that follows warehouse workers and carries inventory, Google glasses for workers to more efficiently locate and categorize warehouse inventory, and a drone called the Parcelcopter, which delivers packages to remote locations or in extreme weather conditions. By working with DHL to cut supply chain costs, Cathay may be able to rebound from its losses in fuel hedging.
In 2016, Cathay lost Hong Kong $8.46 billion on fuel hedging, and in 2015, the first year in which Cathay enacted fuel price hedging, it lost $8.47 billion (Hong Kong). Cathay probably hopes to benefit from lower fuel prices in 2017, but a hedging loss is still expected.
Rather than focus on this misstep and the resulting financial responsibility borne by company executives, Cathay's partnership with DHL should help the airline straighten out its inefficiencies and smooth operations.