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Perishable Transports and Airline Networks
A look at Capacity Management, Networks and Sea/Air Solutions
Martin Schlingensiepen, Vice President Product Management, Lufthansa Cargo
22 SEP 2010
Radisson Blu, Hamburg, 22-SEP-2010
Table of contents
Air freight capacity management and its effects on perishable sector and product categories
Freight operations – vs. belly cargo model
Sea/air // Multi-modal transportation
1
Perishables and Aviation
● Lufthansa Cargo transports approx. 65,000 tons of perishables
annually
● Our most important routes for perishables are
● from South America to Europe
● from Africa to Europe
● from Europe to North America
f E t N th A i
● from Europe to Asia
● Our main commodities transported are
● Fruits and Vegetables
● Flowers and Plants
● Fish and Seafood
2
Meeting the Perishable Requirements in Air Transport
Special requirements of perishables to be met in aviation:
● Temperature-controlled ground storage:
Transportation only t and f
T t ti t ti ith i t li
l to d from stations with appropriate cooling
facilities. Dedicated Perishable Centers at our hub Frankfurt,
Nairobi, Cairo and Miami.
●T t t l t t b d th i ft
Temperature-control per compartment onboard the aircraft
● Reduction of transit points: “Fresh to Door“ Service to European
destinations
● Suitable solutions for temperature controlled transportation:
● Variety of cool containers
● Icecooler mainly for perishables
● Unicooler and latest Opticooler (in operation since September 2010) e g
e.g.
for pharmaceuticals / high tech
3
Air Freight Capacity Management
● Strong focus on profitability of independent Cargo Carriers (vs Passenger-Cargo Combi-Carriers)
● Aim of aircraft capacity management is to fill the aircraft with a best mix of shipments (due to the
i h bl t f it )
perishable nature of capacity)
As a result, cargo is most attractive to airlines if it has
l h t L t t t
- regular character / Long-term contracts
(enabling the airline to plan capacity long- and medium-term)
- high revenue per space used
(optimal mix of load)
long-term allotments
l t ll t t td.Flash ll t t
td Fl h allotment hoc businesses f optimizaton
Ad h b i for ti i t
4
The Value of Perishable Shipments from an Airline‘s Point of View
Attractiveness to cargo Limitations to access airline’s
airlines cargo capacities
Good product to balance trade lanes Other high-value cargo competing for aircraft
capacity on certain routes
Pre-built units
Unpredictability of business due to seasonality
Revenue per cubic meter and limited usage of long-term capacity
contracts
High costs for reefer feeder trucks
5
Table of contents
Air freight capacity management and its effects on perishable sector and product categories
Freight operations – vs. belly cargo model
Sea/air // Multi-modal transportation
6
Why Freighter Services ?
= Consol-Centers of Forwarders
= LH passenger destinations
= Network offer with LH partners
DUS
YYC
YVR FRA
YYZ MUC
SEA YUL
DTW
BOS
DEN
ORD
JFK EWR
SFO IAD
PHL
LAX DFW ATL CLT
IAH
MCO
MEX MIA ● High demand passenger destinations are
GDL not necessarily high demand cargo
destinations
CCS ● Freighter services offer greater flexibility
● Certain cargo needs freighters due to s e
Ce ta ca go eeds e g te s size
or other special requirements
7
Outlook on Capacity Development through 2015
Projected Air Cargo Capacity Development
(Market Total)
+11% ● Global Long-haul capacities set to
grow approx. 11%
● Demand will grow by approx. 31%
g y pp
58%
over the same period
● There will be a shortage of capacities
42%
2010 2015
Pax Freighter
Projection refers to the sum of all markets relevant to LH Cargo Group members
8
Structural Changes After Crisis: Decreasing Overcapacities
Development of air freight overcapacities, indexed on 2008
23%
Forecast 2008
20% Forecast 2010
19% ● Crisis had a dramatic impact on aircraft
on order and number of market players;
Forecast regarding capacity growth
12% reduced significantly
11%
● Likely upward trend for net-yield in
coming years
2%
1% 1% ● Perspective of capacity shortage instead
of overcapacities – temporary or
-1%
permanent ?
-3%
-5%
-6%
2009 2010 2011 2012 2013 2014 2015
9
Lufthansa Cargo Group: Our Strategic Response to The Capacity Challenge
LHR: 3x Intercont LEJ: 8x 777F
8%
1% Share of
group
BRU: 4x Intercont capacity VIE: 10x Intercont
1% 4%
FRA: 18x MD11-F
67x Intercont ZRH: 26x Intercont MUC: 25x Intercont SZX: 6x 744-F
29% MD11-F 9% 10% 13%
25% Belly
10
Table of contents
Air freight capacity management and its effects on perishable sector and product categories
Freight operations – vs. belly cargo model
Sea/air // Multi-modal transportation
11
Multi-modal transportation: first lanes established, exploration of new ideas
to Europe
US domestic
12
AirShip by Lufthansa Cargo: Best of both worlds with a single AirWayBill
● “One stop“ Shopping: Lufthansa Cargo in
cooperation with Hamburg-Süd offers the
complete transportation chain under one AWB
(020).
● Transportation time reduced by approx. 50 %
● Working capital reduced and insurance costs
lowered
● Cost efficient alternative to direct air freight
service
● Dedicated Lufthansa Cargo AirShip terminals
in Shenzhen and Hongkong.
13
Are our structures ready for multi-modal transportation?
● Fine-tuning of the logistic chain is the challenge of today
● Ecological and economical reasons call for more combinations of different transportation modes
● Functional silos throughout the industry prevent optimization of supply chain
● Experts needed for the intelligent cross-linking of different carriers in cooperation with the forwarders
14
Cooperation of carriers Hamburg Süd and Lufthansa Cargo in Shenzhen
15
Thank you for your attention!
Martin S hli i
M ti Schlingensiepen
Vice President Product Management
martin.schlingensiepen@dlh.de
www.lufthansa-cargo.com
