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Martin V Schlingensiepen - Perishable Transports and Airline Networks

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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

				
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