Growing its own business by founding subsidiaries or investing in promising market newcomers is nothing new to Lufthansa Cargo. The Portland, Oregon-based booking platform for air and ocean freight Fleet, founded only in 2014, is the latest catch the cargo carrier has made. The investment could turn out to be a smart move by the cargo crane, market observers predict.
Fleet describes itself as an “online marketplace designed to make the complex world of international shipping easier to navigate.” Big words, but apparently not lacking in substance. Or else it
would be absolutely inexplicable that LH Cargo together with UPS, Hunt Technology Ventures, and some other players invested a total of US$10 million in Fleet’s second round of fund raising, hence
in a company that is only four years old.
Sharp increase in users
Since its launch, Fleet has raised a total of US$14 million, with the now accomplished second round of funding, enabling the company to hire additional IT experts, increase features and functionality of their product, and drive business development forward, reads a company statement.
Meanwhile, a growing number of forwarding agents, Fleet speaks of more than 500, manage their shipments via the IT provider’s portal. Other user groups are importers and exporters. They all can save thousands of dollars when booking their transports online, holds Fleet, “reducing the time spent getting quotes, setting up accounts, managing paperwork and checking on the shipment status.”
Steep learning curve expected
Comments LH Cargo CEO Peter Gerber: “Fleet is a perfect match for us as the company combines innovative and visionary thinking with a strong intrinsic motivation to improve air cargo booking and shipping efficiency and, finally, our customers’ overall experience.” The manager goes on to say: “We expect substantial learnings with regard to our product and service portfolio. Thus, we are sure that Lufthansa Cargo and Fleet will mutually benefit from sharing concepts and ideas.”
His airline’s communications people remained tight lipped when asked about the precise spending in Fleet. All a press release reveals is that it is “significant.” This one might expect, otherwise their COO Alexis von Hoensbroech would hardly not have been granted a seat in the digital company’s expanded Board of Directors.
Wide spectrum of users
Since Fleet provided services can be utilized by different industrial actors, it brings up the question whether LH Cargo doesn’t risk conflicts with forwarders, their key clients. There is reason for concern that agents could be sidelined, should a growing number of shippers book their transports themselves, thus making traditional services rendered by forwarders, such as customs clearance or tailored pharma transports, superfluous in future times.
Forwarders react differently
Not really, comments Quentin Lacoste confidently, Group COO of French agent Clasquin:
“Being passionate about client-centricity, we at Clasquin develop specific digital offerings to meet their expectations and therefore do not see a significant threat in such initiatives (like LH Cargo + Fleet).” The executive further states: “Since years, there is an acceleration of initiatives to facilitate direct dealings between end clients and carriers, via digital & online platforms. As such, the expectations of learning by Lufthansa through the collaboration with Fleet will surely be fulfilled. They can be suited to a particular range of clients, yet the consulting and solution design by forwarders provides a different level of value proposition.”
In contrast, Bastian Trapp, Frankfurt-based Gateway Manager at EMO Trans reacts cautiously skeptically:
“This development requires critical monitoring in the times ahead,” he states. “Time will tell, whether a cargo airline is well advised to liaise with an online marketplace. To me this kind of close cooperation is at least contentious. One outcome might be that competition is intensified, making the business for smaller and mid-sized forwarding agents even tougher.”
Whether such concerns are justified, or rather not, will become apparent in a few years.