2016 is a big year for LUG aircargo handling, which today handles cargo at both Frankfurt and Munich airports, as it celebrates its 50th anniversary later this year.
The cargo handler’s business has grown over the decades, while the industry changed over that period, and handlers such as LUG had to adapt accordingly. Not all the changes have been positive. The firm’s managing director and chief operating officer, Patrik Tschirch notes: “There will never be the big growth rates of the past.”
Why? In large part, he says, because there is so much competition at all levels of the airfreight sector. Over-capacity is not just a problem for the carriers, especially freighter operators, it’s also a problem for other links in the chain. There is over-capacity in the number of handling agents at Frankfurt, for example, Tschirch points out.
The traditional airfreight industry has also suffered from the scale and efficiencies of integrators, which can afford to invest massively in the latest technologies and offer a complete, door-to-door delivery service.
Plus, the airfreight sector has not, traditionally, been sufficiently innovative, Tschirch believes. It has thus been left behind somewhat. Of course, the logistics and transport business will continue to expand as the global economy grows and the world becomes ever more connected, but the airfreight business lacks the coherency offered by the integrators, he observes.
Handlers have traditionally faced tight margins and had to compete strongly for relatively small profits. So what can a service provider such as LUG do to combat the negative trends?
First, they have to be very innovative, Tschirch says, pointing to changes LUG has made to increase the transparency of its operations and to invest in new equipment and systems. They must monitor a wide range of key performance indicators (KPIs), not just simply basic turnaround times, to ensure that all aspects of their businesses are efficient, and must ensure they are supported by all that the latest IT can offer.
Moreover, they should ensure they deliver value-added services to their customers can set them apart and ensure their airline clients’ loyalties. LUG is in the planning phase of creating a new Perishable Facility South at Frankfurt.
LUG has a 40 per cent share in the current Perishable Center Frankfurt (PCF), and while LUG will own the new facility, PCF will operate it.
This set to be open within a year or two, it will be available for use by all carriers flying perishables through the southern part of Germany’s busiest airfreight gateway.