Cargolux and CHAMP – that was quite a love affair two decades ago. But as time passed by the fire cooled down somewhat. Meanwhile the Luxembourg-based freight carrier is evaluating modes to exit the partnership and inhouse many IT services again that had formerly been outsourced to its IT service provider.
It can be assumed that Arnaud Lambert, CEO of CHAMP Cargosystems since February 2015, has been a frequent guest at Cargolux’s head office near Luxembourg Airport Findel lately. Not only for the sake of courtesy since both companies are close neighbours but mainly driven by hopes that he succeeds in changing the minds of Cargolux’s top executives.
The bold truth is, however, that his visits have been largely fruitless. Or as a former leading CV manager put it in a nutshell: “Lambert lost a big battle.” This, because the carrier has decided to undertake a radical reassessment of CHAMP’s holistic Enterprise Resource Planning (ERP) system, provided to Cargolux for inventory reasons, sales support, maintenance management, marketing aspects, human resources or financial transparency, facilitating transactions in real-time.
In other words, all these key ERP tools based on CHAMP technology are currently scrutinized and replaced by others in the months ahead.
Transition has begun
This is confirmed by CV’s head of communications Moa Sigurdardottir to CargoForwarder Global. In light of the changes in the logistics and aviation industry, and the resulting demands of her airline’s business, “Cargolux is revising and adapting its IT architecture and IT operations strategy,” she states.
To achieve this, “we want to leverage more standardized IT services and specialized IT service providers, such as CHAMP for cargo management and IT cloud services for basic IT.”
Ms Sigurdardottir went on to say: “Cargolux not only improves every functional element but also the cost base for these services. In addition, Cargolux can focus on differentiating elements of the core business, which are developed inhouse.”
For example, “providing APIs to our customers to enable digital interaction with them.”
According to her, the transition has begun and will be implemented step by step. “During this phase, some of CHAMP’s services will be discontinued during 2019,” Ms Sigurdardottir announces. She emphasizes however, that CHAMP’s core product Cargospot for cargo management “will continue to provide a significant Cargolux IT service.”
Outsourcing is out
This booking and tracking tool provides a significant number of airlines with complete end-to-end control over their freight shipments. However, it might be a question of time until CV exits Cargospot as well since the platform, although frequently technically updated, is almost two decades old.
It dates back to 2004, when Cargolux split its IT division into a separate legal entity called CHAMP Cargosystems. At that time, this was a global trend to better identify and manage IT costs and spending. In addition, it enabled the company to optimize and continuously improve IT services by leveraging the IT expertise of a specialist IT service provider. “Outsourcing IT was not uncommon in those days,” emphasizes Ms Sigurdardottir.
Nimble competitors are on the fast track
Meanwhile, more modern systems with new generation IT solutions are made available to carriers, seen by the rise of Bangalore, India-based IBS, offering customers a modular architecture and a multitude of applications. Recent IT tenders launched by Korean Air, American Airlines, Asiana and Lufthansa were all won by IBS, claiming that their system helps customers to maximize efficiency, improve revenue, manage growth and reduce costs.
In contrast, CHAMP’s software is “antiquated,” exclaimed a former leading CV executive when asked by CargoForwarder Global. “Their system needs a root-and-branch reform,” he recommends. An
estimate indirectly confirmed by Ms Sigurdardottir.
For Arnaud Lambert and his firm’s stakeholders this is certainly not good news. With CV exiting CHAMP’s ERP functions in the months ahead his company’s revenues are badly hit.
Just before Christmas not really an inspiring outlook.