Cool chain investments being made by LUG in Germany


LUG aircargo handling is building a health care centre at its Frankfurt Airport station to meet the growing demands of the pharmaceutical sector.

LUG handles freight for 16 carriers at Frankfurt and a further eight at Munich Airport, which it is also eventually looking to develop cool chain facilities at.

Speaking to Air Cargo Week at air cargo europe in Munich on 10 May, managing director and chief executive officer, Patrik Tschirch explains the new cool chain developments are about meeting customer needs.

He says: “We are starting to develop a new health care centre for pharmaceutical shipments, which will be most likely be IATA CEIV Pharma certified by the end of the year. We have had our pre-audit already and with the new set-up and development we are quite certain we can achieve that.

“It is going to be a separate area inside our current facility. The issue we have had is that we don’t know the exact volumes to expect and have had a real hard time getting an answer on that who we talk to.

“Right now in Frankfurt we have about 150 square metres (for temperature sensitive cargo), which suffices what we do, but it is not certified and is outdated in terms of the technology.”

Tschirch says LUG will start developing the new facility with three modules, which will add up to 600 square metres.

Each module will have different temperature zones where it can store and handle cargo from +2 degrees Celsius to +8 degrees Celsius and +15 to +25, but he notes the plan is to one develop about 2,200 square metres, but that is something LUG will have to look at and make a decision on whether to expand, depending on demand and volumes.

He adds: “Once it is done in Frankfurt once it is started we will certainly do it in Munich as well as there is a benefit. It is not necessarily about the bandwagon that everybody jumps on but it is a pre-requisite for major clients of our industry to offer and provide that service.”

However, he notes: “I personally question the value in terms of is there really is that higher revenue stream expected and I question that. If you look at the like of Cathay Pacific, Korean Air and Emirates SkyCargo – all these carriers that actually focus on this product and it grows and grows and it is important for them and if you as a service provider cannot offer this then they will not look at you – so once Frankfurt is done we will look at Munich.”

LUG started a contract with Etihad Cargo at Frankfurt in March and Munich in February which proved a challenge in the early part of the year, but Tschirch says it has settled down.

“We have settled in and the teething problems are over and we hired additional staff, but besides having Etihad and what was the killer for us was all our carriers saw a 10-15 per cent growth margin in the first quarter (Q1).

“The combination of that in Q1 was not healthy for us, but we have settled in which took us about six weeks and now everything is fine,” he says.

Tschirch adds Etihad is delivering what they said and LUG is delivering back, noting the UAE carrier is particularly happy with the on-time performance of their freighters, which he says is a lot better than what they had before with the previous partner, and is a testament to the handler’s quality.

LUG expects through the Etihad contract to be handling an extra 50,000 tonnes a year through the two bellyhold flights a day to each of the hubs and full freighters (Airbus A330F and Boeing 777F) which serve Frankfurt twice a week.

As for the rest of 2017, Tschirch says he is targeting adding a new contract in Frankfurt as it is a year when handling contracts are up.

“Our business works in cycles and in Frankfurt it is one of the years where a lot of contracts are coming up.

“Two of our clients are coming up, but there are also another four clients from other service providers which are also coming up as well and there is a tender as we speak.

“We are hoping to add at least one more client and it also depends if we lose one or two of ours, but if we don’t then one more is what we can achieve, but the aim for this year is to really stabilise everything,” Tschirch says.

He explains handling tenders can be quite similar, but he feels what is changing is you now have the professional carriers who “know what they are talking about” and are really prepared and you have the others that “just tender” and don’t know what they are talking about.

Tschirch says: “This is part of the big problem we have in our industry as people just don’t know what they are talking about anymore and it is becoming more and more of a sales orientated industry, which is not wrong, but you cannot lose out on the basics and there is a trend there.

“But on the positive side, more and more carriers are becoming more and more professional. The times when you just have a procurement person sitting there who just came out of university seems to be over, they play a role, but the young people who don’t understand are not left alone anymore and you have someone sitting with them who knows a little more.”

It seems the rest of 2017 is certainly shaping up to be eventful in the cargo handling sector in Frankfurt and indeed for LUG.