LuxairCARGO Investing in the future

Published: Tuesday, July 17, 2018

Horse handling is a steady business, with peaks in case of international competitions…of about 2000 horses handled annually. The other species are less visible but extremely important as well. One-day-old chicks being sent to the Middle East or Africa for farming, pigs imported and distributed in Europe, protected species being exchanged between zoos for DNA variety. Live animal handling is exciting and our staff always do requests for us to go the extra mile.

Luxembourg may just be a tiny nation in Europe with a very small population but it’s big in numbers and innovations. It’s a high-income economy and the second richest country in the world known for its innovative industries in logistics, biotechnology, pharmaceuticals, IT and so on.

It is also the world’s second largest investment fund asset domicile with estimated US$4 trillion deposited in its financial institutions. It is ranked as the second safest tax haven in the world after Switzerland.
In recent years, Skype and Amazon have shifted their regional headquarters to Luxembourg as the country began to establish itself as one of the leading global centers for start-ups, digital financial services and financial technology hub engaging in RegTech, security & authentication, DLT & Smart Contracts, mobile & e-payments, automated investment services, Big Data and analytics.

And that sophisticated way of doing business and looking at things transcend to the country’s robust air freight industry and supply chain.

Big in Europe

LuxairCARGO, the leading air freight handling agent at Luxembourg Airport, is proof of Luxembourgers’ innovative spirit and push for high quality service and excellence.

The company, which caters to all categories of cargo and aircraft, handled a record 938,000 tons of cargo last year and it’s ranked as the 8th top company in the industry.

Laurent Jossart, Executive Vice President of LuxairCARGO, told Air Cargo Update the growth continues this year despite some bumps like a slowdown in volumes last May.

“During 2017 we experienced a double digit growth and an exceptional peak season. Excellent results for all our customers are always very positive, but for us the most important was to keep the service level at the top and having faced no congestion leading to delays for our customers,” said Jossart who was the Chief Financial Officer of LuxairGroup before assuming his current post in 2014.

“This year started extremely well with again a historical first quarter in terms of volumes, but as of May, we have seen a slowdown of the growth but with volumes still above 2017 and our budget. Today, the outlook for the rest of the year is still within the expectations.”

Jossart said part of their success is investing on technology, infras-tructure, people and innovative ideas that will enhance their services, thereby, retain and attract more customers.

“Since the move of our activity from the former facilities to the current Cargocenter, we continuously invested in technology, hardware (infra-structure and handling equipment), software and not least, our staff for professional development. The annual level of investment currently exceeds 5 million Euros,” he explained.
Last year, the company renewed its contract with Hermes Cargo Management System’s to support LuxairCARGO’s handling operations but with provision for acquisition.

“In 2017, we took the decision to renew our cargo management system with the acquisition of HERMES and the implementation will start mid-September 2018 by gradually switching our customers to the new system.
Digitalization is key to reduce costs and further increase the quality and transparency of our activity. It will help us to also streamline our processes and communication as well as reduce or even eliminate manual data records,” said Jossart.

More innovations

Two years ago, LuxairCARGO adopted the so-called truck slot system (TSS) which essentially digitalizes the truck acceptance and parking control system at the airport and using tablets as tool to communicate between trucking companies, dispatching and carriers.

The project successfully worked, speeding up the movement of goods, the loading and unloading process and transactions between parties.

Jossart said that’s just the beginning as the company is planning to introduce more innovations to further enhance their services and protect the interest of their customers.

“But the investment in a new CMS is only part of the game as the best way to give a total transparency to the air freight industry starts with the electronic transmission of accurate data. We still suffer from missing FWB, FHL and loose tremendous amount of time fulfilling tasks which were supposed to be fully automated already at the end of the last century. (Cargo 2000),” he said.

“Now we hope that the Cargo IQ will finally bring the expected results, meaning 100% of data interchange between forwarder and carrier. This would really ease our task, reduce the time spend with non-added value works and improve the product,” he added.

The cargo executive said e-commerce may have brought good business in the industry but the company sees general cargo as still the legacy product that will keep the air freight sector sailing in good or bad times.

“Our customers mainly fly wide bodied aircrafts with specialized cargo products as well as general cargo but e-commerce is just general cargo. We do not keep record of the tonnages it represents in comparison to the other products. This is anyway a very little part of our activity, even if it is getting more and more sensitive in terms of time of transfer or delivery to final consignee,” said Jossart.

The cargo expert said it’s difficult to ascertain e-commerce’s future growth with challenges seen looming like low customs charges, among others.

“Even though e-Commerce is currently booming on intercontinental flights, we assume that the volumes will stagnate, even decline again on the long term as the distribution to the end customer will happen more and more on a continent level (limited to the same customs union areas to avoid costly customs clearance for low value shipments). So Customs could become the show stopper for the growth of individual intercontinental deliveries as a big part of these shipments are declared as low value,” he said.

Growth in pharma & perishables

Mainly driven by aging and growing populations, pharmaceutical products will remain an important part of the global healthcare industry and the air freight sector.

Experts forecast the global pharmaceutical industry to grow 6.3% CAGR in 2018 to US$1.2 trillion. And these products would require air freight to preserve their quality while being transported across the world.

LuxairCARGO is cognizant of this fact with Jossart describing pharmaceuticals as “success story.” The company continues to invest on good facilities for these products along with international certifications.

“The PIL, pharmaceuticals and healthcare products, is a success story. We invested massively in a dedicated infrastructure in 2013, about 4 million Euros, and have been through the GDP certification process. In the meantime we have been already recertified in 2017,” he said.

“We were one of the first air cargo platform to realize an important investment for pharma business and had worldwide been the first platform being GDP certified including the forwarders, carriers, trucking companies and of course us as handling agent. It is a community quality process. We are in for the pharma product with excellent results in term of reputation and reliability,” he noted.

LuxairCARGO handled 31,000 tons of pharmaceuticals in 2017 and forecast it to grow up to 34,000 tons this year.
“We will invest further in the infrastructure in 2019 to automatize the transfers to the cool cell area (70 ULD positions) and continue to believe this market segment will develop in the future,” Jossart stressed.

LuxairCARGO also continues to see growth in the variety of perishables that the company handles for their clients.
“Perishables are a historical product. We have 400 m2 of coolers plus cools cells for up to 70 10ft ULD storage, but again this is mainly transit cargo, handled as quickly as possible before going to its final destination. On import side, fruits and flowers from Central America (Ecuador and Mexico) are the fastest growing products,” said Jossart.

Horse handling steady business

LuxairCARGO prides itself with a reputable and state-of-the-art live animal center with horses as top residents at any given time.

Jossart said the company takes very seriously its role in handling animals up for transportation that “passion for animals” among new recruits is a requirement.

“LuxairCARGO has invested regularly in a complete and state-of-the-art live animal center. Next year, we will renew our center for ungulate species. This year we inaugurated a new groom area, two years ago it was an extension for horses, in total 45 stalls. This allows us to handle large amounts of animals simultaneously up to full cargo flights. Horse handling is a steady business, with peaks in case of international competitions (Olympics, etc.), of about 2000 horses handled annually,” the cargo executive said.

Apart from horses, the company also handles animals of different varieties transported to different parts of the world.

“The other species are less visible but extremely important as well. One-day-old chicks being sent to the Middle East or Africa for farming, pigs imported and distributed in Europe, protected species being exchanged between zoos for DNA variety. Live animal handling is exciting and our staff always do requests to go the extra mile. In fact, one of our conditions while recruiting staff for our AVI station is the passion for animals,” said Jossart.

Expansion and challenges

The Cargocenter, which LuxairCARGO manages at Lux Airport, has been expanded thrice over the past two decades since it was inaugurated. This year, it’s seeing more improvements with the opening of four more parking bays that will allow simultaneous parking of 12 widebody cargo aircraft.

“The Cargocenter we manage since 22 years has been expanded already three times since the inauguration and still allows some growth in the future but the fleet of our customers is requesting more and more ramp parking positions. Last peak season, we have some hours each week reached the maximum capacity of the ramp,” Jossart explained.
Ponts et Chaussées, the engineering and construction body of the government, began work on the project in 2016 and by autumn of this year, the four parking bays will be available for use.

“We will in autumn this year bring into service four additional parking spots that will allow simultaneous positioning of 12 wide bodied aircrafts. Today, we have to limit the access to the handling due to parking spot limitation. This increase will give more freedom of operation to the carriers. If the market remains as strong as the last 20 months, we will consider the necessary infrastructure adaptations to meet the growing demand,” Jossart shared.

A veteran in both aviation and cargo industries, Jossart forecast growth to be sustained in the sectors but the challenge of keeping up with the changing times remain, especially in far flung areas.

He believes digitalization, which the aviation sector embraced first, should also be fully applied in the air freight industry “to have a complete visibility and transparency in the transportation chain.”

“By having accurate and live data on hand, the individual processes can better be analyzed and steered. Additionally, process disruptions can more easily and earlier be detected and corrective actions taken in order to assure the on time delivery and thus protect our customers. We also noticed that the requests received from the forwarders remained the same for the last 20 years,” said Jossart.

“In fact, what is still missing is a reliable transparency and live update of the shipment status made available to the forwarder, shipper and consignee. Unfortunately the electronic interchange is not yet respected everywhere with the same consistency and precision,” he opined.

Game Changer

Laurent Jossart, Executive Vice President LuxairCARGO, is among top executives in aviation and cargo industries with wide and extensive experience, known for pushing the limits and instituting reforms.

Prior to joining LuxairGroup in July 2006, he was the Managing Director of Brussels South Charleroi Airport credited for its successful restructuring, including designing a new terminal and negotiating with its main client, Ryanair.

In 2013, Jossart was awarded “CFO of the year” in Luxembourg in his capacity as CFO of LuxairGroup, a position he held for seven years before taking the challenge of helping LuxairCARGO become more attractive and competitive.

“I have started in air cargo only in January 2014 when I moved to LuxairCARGO. Before, I was the CFO of LuxairGroup and in this position, I gained already some insights through the financial data. However, it has been a real challenge especially as since 2013, we have seen a growth of 34%(250kt) or in average an increase of 7.9% per year,” he shared.

“During the first year, I restructured and stabilized the operational teams to be able to align the processes to the current needs.”

With proven track record to deliver good results, Jossart is highly regarded in Europe’s business community and for those aspiring to follow his path, here’s his advice: “Be passionate, result oriented and creative. Also you need to care for and challenge your staff to go the extra mile. Be ready to meet wonderful cargo people sharing the same enthusiasm.”

And for those facing challenges in the cargo industry, Jossart who studied at Solvay Brussels School of Economics and Management (SBS-EM), the business school of the Université libre de Bruxelles (ULB), one of the largest universities in Belgium, says it’s best to deal with it in a creative way.

“With creativity—air cargo people always find the solution for any challenge.”