The time is now: Lufthansa Industry Solutions’ fresh look at air cargo

CFG: Rainer, our online portal has been covering the air cargo industry for many years now but never really came across Lufthansa Industry Solutions until recently. Have we been short-sighted or has something changed lately?
RL: (Laughs) I would love to say that you have been short-sighted, but the reality is much simpler – our entry into the international air cargo and logistics market was delayed by the pandemic. We have always had a strong footprint in the DACH region, working with clients like DB Schenker, Hamburg Süd (Maersk), and Lufthansa Cargo. When I took over the responsibility for the business unit, AirCargo Logistics, it was clear to me that we would need to broaden our geographical and customer scope. Hence, I am glad that I could convince Markus Flacke to join my team last year. He brings in a broad cargo expertise from different fields and has been tasked with building an international market strategy with the team.

CFG: Lufthansa Industry Solutions is an IT consultancy firm and system integrator. Can you explain in more detail what that means for future air cargo customers?
RL: Sure. I think we can agree that the pandemic brutally exposed those companies that have been laggard on their plans for digital transformation. In the past, the industry often acted with an air of “wait and see” for the next savior technology: resolving everything from legacy IT infrastructure to digital sales channels. Now we notice a new openness to IT consultancy: clients are willing to accept assistance on defining a transformation strategy and to partner with a company that can deliver more than just one competence. The package offered by Lufthansa Industry Solutions does exactly that: end-to-end consultancy from ideation to operation. Furthermore, aviation IT has defined our DNA – one of the more complex IT environments – which means we understand the importance of integrating the latest technology with legacy components.

CFG: I wonder whether the current trend in the air cargo industry to harmonize processes and to implement so-called off-the-shelf solutions may have an adverse impact on your consultancy business.
RL: One may think so, but we see this working in our favor. Yes, an increasing number of companies aim to implement standard solutions, but at the same time there is a growing need for integration services and bespoke solutions on top of that. For example, cargo management systems as a service: from the outside, one would expect that all cargo carriers operate within the same processes, but when you take a closer look, you will see that the parts that make a carrier’s service unique are often outside of such standard solutions. This is where we come in: understanding those needs and solving them.

CFG: What would be an example of such a special service requirement?
RL: Take the increasing requirement for dynamic pricing solutions: carriers’ business models vary from another, a cargo carrier from the Gulf may require a different solution approach than one from North America. I am convinced that our data analysts and scientists can deliver better value than standard solutions in the field of dynamic pricing. I often use the analogy that if all of us were to use the same sat nav system, we would all be heading into the same traffic jam. The same is true for dynamic pricing – providing a powerful solution for a carrier requires an individual approach, factoring in things like market and product strategy, past and future pricing policies, historic data and much more. In general, optimization solutions work better when customized – look at it as a made-to-measure approach.

CFG: What do you consider - in broad terms – are the key technology trends in the air cargo industry?
RL: I think the technology state of the industry and willingness to employ technology has been accelerated by the pandemic. One of the major topics remains the question as to how carriers can provide better rates to customers: a key element here will be the capability to provide dynamic pricing – which means the right price at the right time for the right customer. A topic of overwhelming interest is, of course, the question as to how generative AI, such as Chat GPT, will impact the industry: can it make things easier on the shop floor? How will it influence predictive analytics? Can it be integrated into dynamic pricing engines? And so forth. Process mining as a method is becoming more popular and promises huge efficiency gains in a relatively short period of time, specifically in warehouse environments. Hence, we have set up a dedicated team of experts on this topic.
Computer vision technology is another topic where we see potentials - especially in the digital transformation of warehouse processes. We also see that the IATA ONE Record initiative is gaining momentum, and therefore we decided to sponsor the latest IATA ONE Record Hackathon, which took place in Seeheim, Germany, from the 23-25JUN23. Lufthansa Industry Solutions provided the server infrastructure and took the decision to keep them running after the event. So, interested parties like airlines, forwarders, ground handlers, and others can reach out to us to run their own pilots. It is also a perfect chance to scale the ONE Record pilots and take them out of their academic environment.

CFG: The records and reputation of similar projects like ONE Record, e.g. CARGOXML, are not particularly convincing. Why would you say that this has a chance of success?
RL: I observe that ONE Record has become an initiative that has been executed with a willingness to approach problems with a new digital mindset. Look at the IATA ONE Record Hackathon: 23 different teams created fantastic solutions on ONE Record over the weekend. There was such a positive vibe at the venue. Everybody acknowledges the need to share data, and this is an exceptionally positive initiative to do it.
The respective IATA working group has, from my perspective, a lot more momentum than any of its predecessors, and the participants are all very dedicated to making ONE Record a success. It is also important to look at it not as a new data format, i.e. creating a digital version of a document, but at the underlying data model. This model can be implemented in any relationship which requires data sharing in a straightforward way, and this is what makes it so attractive to logistics service providers. The time for digital transformation is now, and we are very much looking forward to supporting our clients in making that leap from the old into the new world.

CFG: Rainer, many thanks for sharing your thoughts with us. We look forward to hearing a lot more from you and Lufthansa Industry Solutions in the future.