The LATAM Cargo top management expects 2018 to become a thrilling year, with many changes taking place. These include the realignment of the freighter fleet, network expansions, the implementation of a new IT system, door-to-door transport offers and the upcoming joint venture agreements with American Airlines and IAG Cargo. Many challenging tasks waiting to be accomplished, transforming the carrier’s business from the ground up.
Some would say LATAM Cargo CEO Andrés Bianchi is not really in an enviable position in view of the Himalayan – or better Andes high workload piling up at his desk. Others might simply
congratulate him for the many tasks waiting to be accomplished by him and his team for lifting LATAM Cargo to the next – higher level.
No matter how outsiders assess this situation, either from a rather reluctant or enthralling position, the sober truth is that Mr Bianchi together with his peers must set LATAM Cargo’s course for the future enhancing the carrier’s market position, pushing innovations ahead very fast without overburdening the staff or disrupting well-rehearsed processes. Indeed, a Herculean task.
And these are the most pressing projects waiting for being accomplished:
New IT system
Of utmost importance is the implementation of a new IT system, scheduled to be implemented very soon. Without revealing specs, Mr Bianchi says that the tool will enable end-end freight booking options, offering interconnectivity between different users. It should be fully operational by 2020 latest, announces the CEO. Once implemented, “we should have the digital architecture in place to deliver the kind of customer servicer we have in mind, making us the quality leader in South America,” he proclaims. Asked about the provider he remained tight-lipped, pointing out that details will be revealed shortly.
Investments in ground facilities
Another challenging project is the enhancement of ground infrastructure at various Latin American airports, frequently utilized by LATAM and LATAM Cargo. “At some locations we are willing to invest considerable funds ourselves, particularly at highly frequented hubs like Santiago, Sao Paulo and Lima,” Mr Bianchi tells.
This scheme is in full swing, proven by six warehouses built at Brazilian airports, underlined also by LATAM Cargo’s state-of-the-art domestic freight terminal inaugurated last January at Santiago’s Comodoro Arturo Merino Benítez International Airport, the country’s main hub that is currently undergoing extensive expansion.
Upcoming joint ventures
Very high on the carrier’s agenda stand also plans to sign joint venture agreements with IAG Cargo and American Airlines Cargo. It would widen each carrier’s reach considerably, enlarging their footprint in North and Latin America as well as Europe. Once the deal is inked, cargo transports will be based on metal neutrality and revenues split between the parties according to a predefined allocation key. The financial model still needs fine-tuning – among other things – since LATAM Cargo is the only member of the trio with freighters in its fleet, while IAG and AA rely solely on belly-hold capacity. And there is another stumbling block that has to be set aside in the case of the LATAM-American Airlines joint venture: the non-uniform traffic right situation existing between Latin American countries and the USA. While most have signed an open skies pact with Washington, enabling unlimited traffic, others like Argentina or Ecuador haven’t yet. But only in case they become signatory states can the intended JVs be launched.
Freighter fleet realignment
Turning to operational and network issues it can be said that most of the homework has meanwhile been done by LATAM Cargo. Some months ago, the carrier decided to get rid of their four B777Fs and operate a uniform fleet of the Triple Seven freighter’s smaller sister model B767Fs instead, capable of uplifting 52 metric tons per flight rather than 100 tons (B777F). According to CEO Bianchi, LATAM Cargo will up main deck capacity to and from Europe. “In addition to Amsterdam and Frankfurt, which since some time are part of our freighter network, we intend to serve another European destination beginning in April,” he announces, without revealing the name of the airport.
Currently, the carrier operates eight B767Fs but intends adding another four units by 2020 through P2F conversions. The alignment of the freighter fleet fits the volatility of the perishables dominated Latin American markets best and enables LATAM Cargo utmost operational flexibility, states Claudio Torres, Commercial Director South America.
Generally speaking it can be said that LATAM Cargo changed their transport philosophy, focusing on lower deck capacity of their passenger fleet, with freighter aircraft following in line. This new capacity strategy is a reaction to the lasting volatile market situation in Latin America, driven by seasonality and import/export imbalances.
How dependent LATAM Cargo is on perishables is illustrated by the example presented by Señor Torres: “vegetables, fruits, flowers, berries, asparagus and also salmon coming from fish farms in southern Chile account for 94 percent of all exports originating in South America and flown on board our aircraft to the U.S. or European destinations,” he states. It’s a steady flow of goods from the southern production sites to the consumer markets in the northern hemisphere that he expects to even increase in the years to come.