To call the region between China, Indonesia, and India a new Eldorado for Lufthansa Cargo, would be a slight exaggeration. But the carrier's business there is more than satisfactory, and is likely to even further increase. This is for two main reasons: the carrier will soon serve Taipei, and Lufthansa Cargo is showing great interest in getting involved in intra-Asian traffic. CargoForwarder Global (CFG) talked about these and other issues with J. Florian Pfaff (JFP), VP Asia Pacific at Lufthansa Cargo.
CFG: Florian, Taipei is on the route map. When do the flights start and what is the exact routing?
JFP: We will serve Taipei twice a week by operating B777F. The routing is Frankfurt - Riyadh - Taipei. The first flight is scheduled for 01NOV23. We have served the city before with passenger flights, but that was a long time ago.
CFG: Are transpacific flights from East Asia to the U.S. also an issue for Lufthansa Cargo?
JFP: We certainly won't do that with our own aircraft. But one option is to purchase fixed allotments from carriers that operate TransPac flights.
CFG: And what about intra-Asian traffic? After all, the submarkets there are buzzing.
JFP: That's a huge traffic area that is highly interesting for us and that we have on our radar. We don't intend to operate intra-Asian cargo flights but are thinking about airline partnerships. For example, Lufthansa Cargo has the fifth freedom for air traffic between India and China, and the same goes for India - Vietnam.
CFG: Terms like reshoring or nearshoring are booming, as is China +1. How does this trend affect the Southeast Asian market?
JFP: This trend has been around for a while, and it intensified during the Corona pandemic due to supply and logistics chain disruptions. If ASEAN were a single country, it would be the third most populous country with a high proportion of young people. As European and American companies seek to diversify their supply chains, they tend to move their industrial production to Southeast Asia. For this reason, the region has become a top destination in Asia for foreign direct investments.
CFG: No wonder Lufthansa Cargo has its eye on this market.
JFP: We have been present in Southeast Asia for decades and have been able to build trust and strong partnerships with customers there. Thanks to our network, Lufthansa Cargo is able to adequately serve this growing market. Currently, our destinations in the region are SGN, HAN, BKK and SIN.
CFG: As you indicate, Lufthansa Cargo has added Hanoi to the network: What is the current interim status of Vietnam flights, including Ho Chi Minh/Saigon?
JFP: In November last year, we connected HAN via BOM into our network. We have already been serving SGN and BKK with freighter capacity for several years. Post-pandemic developments, and especially the slowdown of air freight demand, prompted us to re-evaluate and change our routings. We still serve both Vietnamese cities twice a week, but have combined the routings to react to the change in demand. The current cargo flight route is BKK-SGN-HAN.
CFG: And what is J. Florian Pfaff's personal assessment of his performance in the region?
JFP: I came to Asia in the summer of 2019 - after more than 8 years as head of Lufthansa Cargo in Germany. So, the first thing I did, was to visit all the stations we had established in this region. Especially the years 2020-2022 were definitely the most exciting times in my almost 34 years at Lufthansa Cargo. Starting with the face mask procurement in Europe for all Lufthansa Group employees in Asia in early 2020, to the mask transports from Asia to Europe and the rest of the world. The use of the passenger aircraft converted to freighters (“preighters”) was certainly a unique experience.
CFG: What qualities are required for a European company to be successful in Southeast Asia?
JFP: Two topics are important: building trust and a good understanding with employees, customers, and partners. At least, this is my recipe for success. The second major theme is the long-term approach we take at Lufthansa Cargo. This is particularly evident in the development of lasting business relationships.
CFG: And finally, the classic question: What has been the greatest success so far and were there also cases that ran aground?
JFP: The greatest success has certainly been the commercial results of the last three years. I still consider the "COVID-19 mask project" as a special highlight, when we flew more than 2 billion face masks from Asia - primarily China - to Europe. My team and I worked 18-hour days - 7 days a week - for several months and, in the end, we could look back as a team that managed the demanding task and cooperated successfully with customers, partners and suppliers.
My most bitter experience was the closure of the CAN station in 2019 – shortly after I had come to Asia. The reason was lack of profitability, which led to the dismissal of more than 10 employees. I am all the more pleased that we were able to open HAN last year. We have also reopened ALA in the meantime. Growth and new hires are clearly more to my liking than shrinkage and layoffs.
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