What Future is there for Mid-Sized & Small Cargo Handlers?

We chose FRA Airport for the first in a series of articles where we intend to look more closely at whether small or mid-sized air cargo handlers still have a future at European airports.
CargoForwarder Global listened to Christoph Papke, owner and Managing Director of Cargo Operation Centre (COC), based at Frankfurt’s Cargo City South.

Christoph Papke  -  courtesy COC
Christoph Papke - courtesy COC

Flexibility is the-name-of-the-game
COC which this year completes its first decade of business, was founded by Mr Papke in 2006 as an all-cargo handling business mainly working along the lines of outsourcing physical cargo handling staff to one or two of the larger handlers at FRA.
It has not been an easy ten years for Christoph Papke who is also a board member of the German Air Cargo Club (ACD).
“I’ve had to be very flexible during the past ten years in order to place COC where it is today,” Christoph explains.
He strongly emphasizes that this flexibility was, or even now, is not geared towards offering cheaper rates in order to gain business.
Different business pillars had to be created in order to convince potential clients of the benefit of using COC’s services, this is what Papke’s COC offers.

Start-up clients were the larger handling entities, Swissport and Aviapartner, where COC managed a contract to supply physical handling manpower to support their operations.
Mr Papke states that already by 2008, COC had a clean balance sheet and was by then showing a small profit.
Fraport Cargo Services were added as a customer in 2009.

Cheap competition erodes customer loyalty
Christoph Papke who was born in 1959 in the Bavarian town of Staffelstein, close to Bamberg, spent much of his youth moving from one location to another. His father was an engineer who’s workplace changed frequently and the family moved along with him.
They finally settled in the state of Hesse in 1986 and that’s where Christoph started his training as a freight agent.
He spent some time with Air France Cargo as a salesman and was also a Key Account Manager at Danzas and D-Logistics Health Care unit before going out on his own in 2006.
He says he has not looked back since although it’s tough as an independent operator, especially these days where in his view “there are too many unserious operators in the market who are juggling against each other price-wise and having a negative effect on established small and mid-sized cargo handlers.”
This he adds, erodes some of the customer loyalty as prices come under strong pressure.

Four pillars keep COC moving in the market
Mr Papke is proud of the fact that despite the price pressure, that his company generated a revenue of €3.4 million in 2015 and his prognosis for 2016 is €4.5 mn. This more 30 percent increase will he says come from 2 to 3 new clients coming on board and his policy of operating with four different handling models.

  • General air cargo handling - where all of COC’s 150 staff are fully certified for general handling activities as well as dangerous goods and the built-up-unit (BUP’s) handling. Documentation services are also offered.
  • Outsourcing or Contract Logistics - here COC offers their expertise and staff to manage fully or partly the warehouses of logistics operators.
  • Commercial Contract Staff Hire - COC has acquired the necessary authorization to offer handling staff to other operators during peak periods or where there are staff shortfalls due to holiday periods or sickness. This service is offered with the aim of helping other logistics providers to lower their manpower costs.
  • Security & Surveillance Services - comprehensive surveillance services in accordance with §34 of the Trade Regulations Act which covers cargo surveillance and inspection and security in predefined areas.

There are COC in-house training programs which train new staff and give regular refresher courses to those already on board.
Cargo Operation Centre is ISO 9001 certified since 2014

The past and the future
Looking back on the past decade, Christoph Papke is rightly proud of what he started in 2006. The fact that his company is still being in business is due to factors such as having offered a stable handling basis with a small but loyal client base as well as a reliable pricing structure for his clients and loyal staff who have always been paid fully and on time.
The downside has been the continued negative pricing policy of some of his competitors and in Mr Papke’s view, the resulting decline in service which gives the trade a bad name.

When looking at the next decade, COC will in Mr Papke’s words continue to try and gradually increase its customer base with a further 2-3 clients. Christoph does not rule out the possibility of retiring himself in the not so distant future once a suitable takeover offer were to come onto the table or if he finds a dedicated new managing director.
Until then however, he stays at the helm.
He has a further leg to stand on since he also became Managing Director of S-P-S Germany which is a daughter company of S-P-S Netherlands and which manufactures, leases and maintains non-motorized airport equipment.
S-P-S Germany generated sales of 1.2 million euros in 2015.

Flexibility keeps Mr Papke happy and still in the game, but the negative pricing trend makes it more and more difficult to reach a profit.

John Mc Donagh

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