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Air France-KLM Cargo exec warns that boom years will not return
EXECUTIVE vice president of Air France-KLM Cargo, Bram Graeber, who steps down on June 1 to take up a role in the maritime sector at Royal Boskalis Westminster, has warned that the strong growth in the air cargo sector experienced over three decades prior to 2008 is not going to re-emerge any time soon.
"We have had the idea for a long time that we could escape from margin pressure by adding extra services and quality to our products," he said in London's Air Cargo News. "Instead we have to offer very sharp service at a very good price."
He said the demand-supply balance has changed forever. "Growth on the back of hi-tech shipments and China is not there anymore."
In a bid to adapt to the reality that the passenger side of the business is outstripping cargo, Air France-KLM has made massive cuts to its freighter fleet.
This will come to an end in June when the last MD-11 departs, leaving just two Boeing 777 freighters at CDG and four B747Fs (operated by Martinair) at Schiphol.
That strategy, said Mr Graeber, should help the freighter operations to return to profit next year. The focus will then switch from re-sizing to being more efficient - doing things in a more cost-effective way through better planning and improved sharing of data with forwarders.
Mr Graeber admits that he is amazed at how slow cargo has been to adapt to new electronic ways of interacting. "Things are changing now, but the system is still very inefficient," adding that some "companies still do everything by phone".
He explained: "It is unbelievable that I get a booking on Monday for one tonne, the forwarder knows on Wednesday it will be half that, and then what turns up is 30 per cent of what was booked.
"There is always some volatility, but it should be possible to exchange some data. Even if we could save two per cent of load factors by this method, that would be a very big thing.
"Sometimes the shipper has the data and does not tell the forwarder, but sometimes the forwarder knows and does not tell us."
He also suggested that premium products need to be drastically simplified. He is not saying that the carrier should now exit sectors such as pharmaceuticals or express, but that every activity has to be analysed to see if it is profitable.
Underpinning all this has to be further investment in IT. Mr Graeber applauds his predecessors for investing in a single management system that he believes has made the airline more reliable to do business with and shrunk its unit costs.
"We have also invested in digital programmes to make connections from this system to the outside world," he added.
"We have had the idea for a long time that we could escape from margin pressure by adding extra services and quality to our products," he said in London's Air Cargo News. "Instead we have to offer very sharp service at a very good price."
He said the demand-supply balance has changed forever. "Growth on the back of hi-tech shipments and China is not there anymore."
In a bid to adapt to the reality that the passenger side of the business is outstripping cargo, Air France-KLM has made massive cuts to its freighter fleet.
This will come to an end in June when the last MD-11 departs, leaving just two Boeing 777 freighters at CDG and four B747Fs (operated by Martinair) at Schiphol.
That strategy, said Mr Graeber, should help the freighter operations to return to profit next year. The focus will then switch from re-sizing to being more efficient - doing things in a more cost-effective way through better planning and improved sharing of data with forwarders.
Mr Graeber admits that he is amazed at how slow cargo has been to adapt to new electronic ways of interacting. "Things are changing now, but the system is still very inefficient," adding that some "companies still do everything by phone".
He explained: "It is unbelievable that I get a booking on Monday for one tonne, the forwarder knows on Wednesday it will be half that, and then what turns up is 30 per cent of what was booked.
"There is always some volatility, but it should be possible to exchange some data. Even if we could save two per cent of load factors by this method, that would be a very big thing.
"Sometimes the shipper has the data and does not tell the forwarder, but sometimes the forwarder knows and does not tell us."
He also suggested that premium products need to be drastically simplified. He is not saying that the carrier should now exit sectors such as pharmaceuticals or express, but that every activity has to be analysed to see if it is profitable.
Underpinning all this has to be further investment in IT. Mr Graeber applauds his predecessors for investing in a single management system that he believes has made the airline more reliable to do business with and shrunk its unit costs.
"We have also invested in digital programmes to make connections from this system to the outside world," he added.
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