Obviously, CHAMP Cargosystems doesn’t feel like being a dinosaur, facing extinction sooner or later. Instead, the management of the Cargo Management System (CMS) provider assures that the
company is in a comfortable situation. In this context they refer to their phenomenal 85 percent market share in messaging, accounting for 53 percent of the global market share. Two thirds of
their customers belong to the top 25 leading carriers, such as Singapore Airlines, Cathay Pacific or Japan Airlines.
Impressive figures indeed, announced by CEO Arnaud Lambert on several occasions. But – caution – they are deceiving as well. Because they conceal the fact that the market position of the SITA/Cargolux daughter is increasingly challenged by agile newcomers. This gradual loss of significance is caused by a multitude of mutually depending factors, particularly management shortcomings and insufficient supervision by their equity holders.
These votes of no confidence should irritate the executives in CHAMP Cargosystems’ Luxembourg headquarters and the company’s stakeholders SITA (51%) and Cargolux (49%) as well: Turkish Airlines,
Asiana, Lufthansa, AF-KL, IAG, Air China, Korean, Etihad, American Airlines, United Airlines, Air Asia, Luxair and some other carriers decided against CHAMP’s Cargo Management System (CMS)
following tenders. Instead, they signed contracts with competing IT providers such as Accelya, Accenture, IBS, SmartKargo (QID Technologies) or Hermes. Other irritating example: Qatar Airways, a
once loyal CHAMP supporter, asked Wipro to develop a new Cargo Management System by blending CHAMP’s product Cargospot and Emirate’s Mercator Skychain. The result is “CROAMIS” built inhouse in
less than three years and meanwhile also in the design stage at LATAM Cargo as the Latin American carrier confirmed to CargoForwarder Global.
On way south
Obviously, a growing number of airlines is increasingly losing confidence in CHAMP’s CMS. The once proud company, so it seems, is on its way south.
But what are the causes of this visible downfall? They are numerous, not countable on the fingers of one hand.
The first alarm bells started ringing in 2008 when CHAMP’s management, failing to replace or re-develop eCHAMP in due time decided to acquire IT provider Softair AG. A company that tailored their products before 2000. Their tools had not been designed to be extended over a long period of time especially for serving large tier 1 carriers such as Cathay Pacific, for instance.
Cargospot successively required CHAMP to dramatically increase the number of developers to maintain and extend the CMS’s functionality inherited from Softair. However, bugs remained a recurring issue affecting many if not all accounts as evidenced by CHAMP customer satisfaction surveys
The next mistake made is still ongoing, because CHAMP missed replacing their aging system eCHAMP first then Cargospot with a new state-of-the-art IT platform easy to manage and handle. There were some replacement initiatives such as ‘Cargospot NextGen’ for instance, but they were never realized. In contrast, two modules (Booking & Quote) were finalized but the management failed to fund these products.
Given this situation, they knocked at Luxembourg government’s doors, asking for state aid of estimated three million euros and addressed shareholder Cargolux as well, asking for submitting a double-digit euro amount, sources close to the case confirmed to CargoForwarder Global.
While CV rejected any financial support, Grand Duchy’s politicians approved the transfer of taxpayer’s money. However, despite these public subsidies for innovation, CHAMP failed to come up with
a final solution. As the government asked them what happened with the subsidies and what innovations were achieved, they had nobody left to answer as the CIO/CTIO had exited the company and a new
Innovation Manager was brought in as replacement. This they told Luxembourg’s government, reasoning their failing of developing new IT tools this way.
A lame excuse by the top management to secure further state subsidies, internal sources told CargoForwarder Global.
This all was accompanied by internal tensions and changes of leading staff, for instance at VP and Senior Manager levels, e.g. VP Sales & Marketing, VP Sales Asia-Pacific, VP Customer Services, CIO, CTIO or HR Managers. As result, those who departed were replaced by some “softer” ones. Together, they kept managing the company in a way that guaranteed a "sufficient" turnover increase (roughly 10% year) and profit (estimated €4 to 3 million) to satisfy the shareholders and to also guarantee their annual bonus and privileges without too much effort.
Meanwhile their financial situation is deteriorating evidenced by the fact that CHAMP’s sales pipeline is relatively empty for more than one year with only small deals (Ground Handling companies)
on the hook but no tier 1 or big revenue generating new accounts acquired.
It can be assumed that the many personnel changes impacted the company’s entire strategy. But as the Executive Committee keeps on generating the EUR +/- 4-3 million profit annually, the shareholders never challenged them too much, not exactly knowing what was happening behind closed doors: concerning the strategy, solutions, product development, and optimistic figures communicated by CHAMP’s management. However, what the big shots did not tell the public: In Luxembourg, over the last 5 years, at least 12 of their managers and staff went into serious burnouts due to the “impossibility to achieve or deliver” objectives set by the Executive Committee. This went silent and no one of these fallen “CHAMPions” was ever supported, credible insiders confirmed to CFG.
With Cargolux’s decision to in-house all IT services related to non-cargo activities, the airline exclusively confirmed to CargoForwarder Global, a bright light was cast on CHAMP’s strategy and market image. A source close to the case told CFG confidentially that the decision to re-insource the ERP / infrastructure / helpdesk / mail and some other functions is mainly due to “high frustrations” on Cargolux’s side with their long-term CMS provider’s price and product quality.
However, CV’s main decision for re-integrating core IT services is obviously based on achieving a higher business process efficiency and cost reduction as part of their vision 2025 strategy, as outlined by their communications department.
Rounding things off
In view of the many deficits and bad decisions taken in recent years, as credible sources claim, it would be recommendable the CHAMP managers sticking their heads together fast for modernizing their product portfolio, presenting a realistic roadmap and improve service quality to regain customer confidence in order to overcome the stagnation.
However, this could well remain a pious hope since there is little indication that the CMS provider’s execs feel committed doing so. Instead, they seem to believe that “business as usual” is the more promising strategy, in connection with scandalous attacks by their CEO defaming critical media that touch CHAMP’s sore spots, as experienced by this publication.
It remains to be seen if this circle-the-wagons-mentality is helpful at the end. The dinosaur's fate should serve as warning.
Their shareholders SITA and Cargolux, particularly CHAMP’s 500 staff, of whom 200 work in Manila, Philippines, deserve better. They all might eagerly want to know which way the Luxembourg-based CMS provider will ultimately go. Currently, CHAMP resembles a plane without pilots on board.
Asking Amazon’s Alexa for answers doesn’t help either since this innovation never worked but turned out to be just a marketing buzz launched by CHAMP managers.
This we can easily evidence if so desired by CHAMP CEO Mr Lambert.
More in: CHAMP Chief Raises Heavy Reproaches Against CFG, published in this CFG issue.