LH Cargo to Launch an Offensive Home Market Campaign

Since years, the carrier’s market share on its German home turf fluctuates between 22 and 24 percent. “Not enough, we can do better,” says CEO Peter Gerber, while announcing new efforts to up the percentage.

Frankfurt is home of European air freight, states Peter Gerber  /  source: hs
Frankfurt is home of European air freight, states Peter Gerber / source: hs

Frankfurt Airport plays a pivotal role in his forward leading strategy. “London Heathrow ranks first in Europe in terms of passengers, the same accounts for Frankfurt when it comes to cargo throughput. It’s the nucleus of European air freight” states LH Cargo’s helmsman Peter Gerber. Having said this he underlines his words with figures. While Frankfurt recorded 911,000 tons of exports in 2014, it was 509,000 tons at Heathrow, 418,000 tons at Amsterdam and 371,000 tons at Paris-Roissy.

FRA offers cargo actors major benefits
At Rhine-Main, all major forwarders are located together with a large number of medium-sized and smaller agents. They all are benefiting from the country’s industrial density, the burgeoning exports and the excellent trucking connections for feeder services both to the domestic market and to the neighboring industrial centers in Switzerland, Austria, the Benelux states and parts of France. 
What suits forwarding agents applies equally to airlines, proven by the many cargo carriers that chose Frankfurt for becoming their preferred European gateway. 
Frankfurt’s development into a central European cluster for air freight, nourished by a liberal economic environment, has stimulated cargo volumes and led to a throat cutting competition between carriers, ground handlers, GSA’s and forwarding agents.
That’s the situation LH Cargo and all the other industrial actors are facing day by day at Rhine-Main‘s large airport.

Many hurdles have still to be set aside
So what room does this leave for Herr Gerber and his airline to ease the squeeze and to capture additional market shares beyond the long-time 20-plus percent, as intended?
Not much at first sight, but when taking a closer look there are some opportunities from LH Cargo’s point of view that – once fit together – could lead to more attractiveness of Rhine-Main and ultimately higher tonnage carried by the airline, which also should be of benefit for other contenders.

 

These steps are:

  • The fast removal of existing customs barriers to speed up the throughput of shipments
  • Focusing on special products like temperature critical items and develop Frankfurt Airport into a center for special shipments (project “Cool Hub”) in order to increase the uplift of such goods by Lufthansa Cargo but also other carriers
  • Establishing a new point of acceptance and delivery for LH Cargo addressed shipments at FRA’s CargoCity South. This would save time since up to now all goods to be handed over to the carrier have to be delivered by truckers to Frankfurt’s CargoCity North
  • Improving the access to Frankfurt Main’s two cargo cities, particularly the CargoCity South, thus preventing trucks getting stuck in jams, resulting in delayed delivery of exports or pick-ups of imports
  • Easing the parking lot situation within the cargo areas to prevent the access to warehouses getting blocked by waiting trucks.

´Benchmark is AMS
All in all, many of these projects resemble steps taken by Frankfurt competitor Amsterdam some time ago for speeding up cargo processes and integrating the many different actors, including shippers and authorities, to better understand the individual needs and sing the same song at the end of the day. Successfully, by the way, as explained by AMS’s cargo boss Enno Osinga some months ago during his appearance at Germany’s Air Cargo Club.
In the weeks after Enno’s appearance a new association named ‘Air Cargo Community Frankfurt’ was established, made up of hand-picked delegates from cargo airlines, freight forwarders, GSA’s and ground handlers. The member companies expect their cooperation to result in increased process efficiency and an even stronger positioning of the airport. They are focusing on topics like ‘Process and Infrastructure Optimization,’ ‘Temperature Sensitive Shipments’ together with ‘Marketing and PR’.
This club is an appropriate means to table existing problems at FRA for solving them fast and enhance the infrastructure, states Gerber.

Complex strategy
However, improving processes at Rhine-Main is only one of his airline’s key strategic aims within their strategy “Lufthansa Cargo 2020.”
The entire campaign is quite complex, including the renewal of the freighter fleet, new forms of cooperation like the joint venture just signed with ANA Cargo, the construction of a state-of-the-art logistics center called LCCneo, driving eCargo processes forward and implementing a new IT structure, to mention just some of the items intended to be realized in the coming years.
But to accomplish the aim to fast capture additional market shares another important task must be tackled immediately: “We will intensify the direct contact to our clients,” emphasizes Peter. Obviously bearing in mind that cargo is mainly a people’s biz.

LH Cargo’s fifth Triple Seven Freighter arrived last Thursday in FRA / company courtesy
LH Cargo’s fifth Triple Seven Freighter arrived last Thursday in FRA / company courtesy

‘Hallo Germany’ arrives 
LH Cargo‘s fifth Boeing 777F arrived at Frankfurt on the 12th of February, thus completing the original order for five of these modern freighters capable of carrying more than 100 tons of cargo.
The option for a further five still remains intact and if taken up then the additional aircraft would be delivered by September 2020.
It seems there is no reason why LH Cargo should not take these aircraft also.
Peter Gerber, Chairman of the Executive Board and CEO of Lufthansa Cargo stated “in our opinion, the Boeing Triple Seven is the best aircraft for our fleet structure. Its performance already far exceeded our expectations last year.”

The new aircraft has been named “Hallo Germany” and joins “Good Day USA,”  “Jambo Kenya,” “Ni Hao China” and “Ola Brazil.”
Hong Kong will also be served with the Triple Seven as of March this year.

Heiner Siegmund / John Mc Donagh

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