In May 2018, Lufthansa Cargo and United Cargo signed a comprehensive freight cooperation agreement on routes between the USA and Europe. This pact based on “metal neutrality” pays off especially in Covid-19 times.
The current situation can be summarized as follows: Due to continued travel restrictions, Lufthansa Airlines stopped serving most routes operated pre Covid-19 between Europe and North America.
Which means that a large part of the lower deck air cargo capacity is missing, leading to a mismatch of demand and supply. Prior to the pandemic, bellies accounted for 60% of the carrier’s total
capacity offered to the market on routes across the North Atlantic. However, that is a thing of the past.
To keep the ball rolling in challenging times, Lufthansa Cargo stepped up both freighter and “preighter” flights across the big pond as best as it could – and with remarkable success, benefitting both the carrier’s customers and his own company, Bernhard Kindelbacher, Lufthansa Cargo’s VP for USA & Canada, states.
“Thanks to a number of creative measures, last July we succeeded in flying 70% of the tonnage that we carried on North Atlantic routes in a year-on-year comparison,” the manager illustrates. A satisfying figure in view of the ongoing crisis: “We managed to achieve high capacity utilization of our U.S.-bound freighters coupled with very healthy yields.”
Bernhard Kindelbacher holds the position of Vice President USA & Canada and has been based in Chicago since June 2016, with responsibility for sales and handling activities in North America and Canada. The manager joined the Lufthansa Group as a trainee in 1990.
JV pays off
Turning to the current market situation, he points to surveys showing that Westbound rates remain fairly strong, while Eastbound margins have been leveling out since June.
Due to the fact that secondary routes to/from the USA are not serviced by Lufthansa Passenger Airlines since April, or have been vigorously thinned out, logistics sister Lufthansa Cargo had to step up its efforts to keep supply chains running in close cooperation with JV partner, United Cargo. “We concentrate our ops on our ‘Primary Air Freight Hubs’ which are New York (JFK), Chicago, Dallas/Fort Worth, Atlanta and Los Angeles,” Mr. Kindelbacher explains.
In this respect, he emphasizes that the partnership with UA has proven to be robust and very beneficial for both sides, especially in the current crisis. “Our combined network as well as their dense domestic network ensures seamless and fast delivery of our shipments all across the USA,” Mr. Kindelbacher states.
The Atlantic Westbound yields remain strong, the Eastbound yields less so
First vaccine quotations
Currently, his staff is in full preparation for the mass transport of corona vaccines expected for the 1st quarter next year. In his opinion, the individual shipments will not be filling charters as seen with PPEs, but there will be many individual consignments requiring temperature sensitive procedures.
In this respect, Lufthansa Cargo points out that it opened an enlarged and modernized Cool Center at Chicago Airport in June, complementing existing facilities in Atlanta, Washington DC, or JFK. Although a vaccine is not yet available, the first requests for quotations are starting to come in from producers and forwarders, he says. This is probably also triggered by the fact that many governments have already secured themselves large quotas of a possible vaccine from pharmaceutical manufacturers, in order to ensure the supply to their citizens once the serum is available.
Kindelbacher drives digitalization
Bernhard Kindelbacher is convinced that the key to further improving air freight is digitalization. "At Lufthansa Cargo, we already have several very suitable tools, such as the various electronic booking channels, electronic freight documentation, and proactive customer notifications on the delivery. For our U.S. customers, our local teams are now bundling and synchronizing all these electronic offerings to further optimize our service level. This also allows to immediately notice possible variances in data and gives us the opportunity to provide corrective support at an early stage," he reports.
This would also help to make optimum use of scarce freight capacities. Especially in view of the looming vaccine peak, that is certainly a crucial aspect for all players involved.
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