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Hapag-Lloyd’s profits dropped in 2023

Heiner Siegmund
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Hapag-Lloyd’s profits dropped in 2023

The sharp decline in freight rates after the end of the pandemic, has left a clear mark on the shipping company, Hapag-Lloyd. This is evidenced by the annual report tabled last Thursday (14MAR24), at the company’s headquarters in Hamburg. Revenue halved compared to 2022, dropping to just under 17.8 billion euros. Profit fell even more steeply, slipping from 17 billion euros in 2022, to 3 billion euros in the past financial year.

Hapag-Lloyd’s headquarters in downtown Hamburg, inaugurated in 2003, stands for tradition and modernity – photos:  CFG/hs

Although the transport volume remained stable at 11.9 million standard steel boxes, freight rates declined by almost 50% year-on-year. Hence, customers had to pay only 1,500 euros on average to ship a 20-foot container. The downward trend intensified towards the end of last year, seen by the negative EBIT posted by Hapag-Lloyd in Q4, 2023. An alarming signal as a quarterly loss has not happened since 2016. On the positive side: the yearly report shows a decrease in greenhouse gas emissions. Fleet modernization measures and other initiatives led to savings of 800,000 tons in comparison to the previous year.

Third-best year ever
Despite the decline in profits, the Hapag-Lloyd management was content with the 2003 annual results. It was the third-best year in the history of the shipping line, which currently operates a fleet of 278 vessels, emphasized CEO, Rolf Habben Jansen. His contract has been extended to 2029. At first glance, it is astonishing that Hapag-Lloyd’s consolidated profit was even higher than the consolidated EBIT of 2.5 billion euros. “Because we generated a positive financial result thanks to our high liquidity,” illustratedCFO, Mark Frese.

The shipping company will pay stockholders a dividend of 9.25 euros per share, subject to approval by the supervisory body. The City of Hamburg holds a 13.9% stake in Hapag-Lloyd and can expect a cash flow of 225 million euros (1.5 billion 2022). At Kuehne+Nagel and the Chilean shipping company, CSVA, the dividend is more than twice as high. Both hold around 30% in Hapag-Lloyd. Other shareholders are Qatar Holding (12.3%), and Saudi Arabian Public Investment Fund (10.2%). Only 3.6% of the shares are in free float.

Sailing around Africa the only option
While fuel prices remained at stable level, the shipping company has incurred considerable additional costs due to the longer sea routes going around the Cape of Good Hope. These prolonged voyages, compared to a Suez Canal passage and operated since the beginning of this year following massive Houthi shelling of merchant ships, were the only option for safety reasons. “The lives of our crew members are much more important to us than a longer journey time of seven days,” argued Mr. Habben Jansen. The Houthi attacks in the Red Sea and the Gulf of Aden, pushed freight rates up again. It is currently unclear how long this situation will last and what impact the enlarged sea route will have on business figures. In any case, the longer transport routes mean a cost disadvantage for Western shipping companies, as Chinese competitors such as Cosco, continue to use the Suez Canal. They are not being shot at by the Yemenite Houthi regime.

New hub and spoke system is coming
When asked about the partnership with Danish shipping giant, Maersk, marketed as ‘Gemini’, Habben Jansen said that this link will be “an enabler for quality, schedule reliability, and accelerated decarbonization.” A hub and spoke system is being set up to increase the efficiency of transportation. Large ships such as the Berlin Express (23,700 TEU), will transport the steel boxes between key ports along their intercontinental routes such as Singapore, Jeddah or Tangier on the West-East-West sectors. There, the shipments will then be transferred from the big vessels to smaller ships that will cover the final leg of the boxes’ voyage, calling at ports such as Antwerp, Wilhelmshaven, or in the case of Singapore hub, harbors in Vietnam, for instance.

Vessels of the Megamax class, such as the Berlin Express (23,600 teu), form the backbone of the hub and spoke system planned jointly with Maersk. H-L has ordered a total of 11 units – CFG/hs.

No integrator intentions
Addressed by CargoForwarder Global, the CEO emphasized that, unlike other major shipping companies, Hapag-Lloyd does not intend to become an integrator. “That is why we will not use Maersk Air Cargo’s freighter fleet capacity for our own shipments,” he clarified. For marine feeder services, Hapag-Lloyd will probably need an additional number of ships in the range of 5,000 to 6,000 TEU, he announced. The exact requirement still needs to be determined and depends on the market situation, he said.

The company’s ‘new kid on the block’, as Habben Jansen called the 2023 incepted Terminal business unit, “got off to a good start.” But he declined further investments during the next two year since prices have increased substantially. In mid-term, however, Hapag-Lloyd intends to acquire new assets, this way growing its self-managed and controlled port infrastructure. “We will continue to grow in our new Terminal and Infrastructure business, as well as our share and portfolio of hinterland transports,” Mr. Habben Jansen assured.

2024 is going to be challenging
For the current financial year, Hapag-Lloyd forecasts the Group EBITDA to be in the range of 1 to 3 billion euros and the Group EBIT to be in the range of minus 1 to 1 billion euros. However, this prediction remains subject to considerable uncertainty given the volatile development of freight rates and geopolitical challenges. Due to the multiple global crises “we expect to see an overall decrease in earnings in 2024. As part of our Strategy 2030, we will be focusing even more intensively on quality and sustainability. At the same time, we will also need to reinforce our top 5 position on the global market and realize improvements in terms of cost efficiency and productivity,” Mr. Habben Jansen rounded off.

Gebrüder Weiss returns to Riege, after 10 years

Heiner Siegmund
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Gebrüder Weiss returns to Riege, after 10 years

Austrian logistics company, Gebrüder Weiss, and IT manager, Riege cooperated until 2011. Then, the transport company switched to a competitor. Now they have decided in favor of Riege again, as their former partner no longer met the requirements.

Gebr. Weiss is based at Lauterach, Austria, close to the Swiss and German borders  – company courtesy

For Riege Software, the decision has a twofold effect: a former major customer has been won back. This shows that the software solutions offered by the Dusseldorf-based IT company stand out with regard to quality and reliability. This applies in particular to their core product, Scope, which is widely known in the cargo industry as the leading freight forwarding and customs software tool, and has gained increasing popularity among large and small transport companies, alike.

Remarkable technical and practical skills
In addition to the operational benefits enabled by the product, there is another aspect that motivated Gebrüder Weiss: The undisputed expert knowledge of the company’s service team as most Riege members have previously held jobs in forwarding agencies. Hence, they know exactly which issues must be dealt with in daily business processes. By using Scope, process efficiency will be upped, the flow of shipments accelerated, and the failure rate further reduced, states a joint Gebrüder Weiss and Riege release. Especially in regard to customs issues, the electronic tool, Scope, has lately become a gamechanger – as was acknowledged by leading German customs officials at a gathering in summer 2023 (CargoForwarder Global reported). This is indirectly confirmed by Werner Dettenthaler, Regional Manager Land Transport Germany at Gebrüder Weiss. “The decision [in favor of Scope] was easy for us and we were pleasantly surprised at how quickly the changeover worked. Scope was up and running in just four weeks.”

Riege Software welcomes the return of Gebr. Weiss as user of Scope  –  courtesy: Riege

Managing goods digitally
Developed by Riege Software, the integrated transportation management system, Scope, automates processes, communicates with third party providers or online portals, and thus enables users to digitally manage shipments along the global supply chain with no need to change systems and without fault-prone multiple data entry.

“Our software for freight forwarding and customs manages all processes from the first to the last mile, and enables users to collaborate seamlessly, which is the ideal basis for sustainable growth,” Tobias Riege, CEO of Riege Software, underlines.

In addition to technical and operational aspects, the values to which Gebrüder Weiss has committed itself also reflect Riege’s values to a large extent.

Consistency in values
“We are proud to call a company with such a great tradition as Gebrüder Weiss, our customer and like to welcome them back in our traditional circle of clients,” states Tobias Riege. He adds to this that it is no coincidence that the two companies share many of the same corporate values. “We also strive to operate sustainably, have a zero-fault tolerance when it comes to our products, and we are proud of our independence as a family-owned company managed in second generation.” Gebrüder Weiss is a global, full-service logistics provider with around 8,400 employees and 180 company-owned stations. In 2022, the agent generated annual sales of 3 billion euros.

At Liège Airport cargo grew double digit in JAN and FEB

Heiner Siegmund
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At Liège Airport cargo grew double digit in JAN and FEB

The Walloon Airport reports stark traffic figures for the first two months in 2024. According to data, 175,604 tons were handled at LGG in JAN and FEB, an increase of 13% year-on-year versus a throughput of 155,017 tons achieved in the same period a year before.  Aircraft movements went up even 15% but the number of night flights has been halved compared to the same period in 2023. This is good news for the neighboring communities, since noise emissions were thus significantly reduced.

At Liège Airport freighter aircraft are lining up – photo: CFG/hs

The traffic figures confirm the robustness of Liège Airport’s business model that focuses entirely on cargo activities, aviation experts emphasize.  

The upward trend in volumes seen at Liège is in line with growing global demand, as indicated in a study from WorldACD Market Data. Despite strong competition within a geographical radius of 500 km, LGG has recently developed into an airport of choice for many carriers. Since the beginning of this year, five new airlines started operating to and from the Belgian airport. These are Egyptair Cargo, Compass Cargo Airlines, My Freighter, Turkish Cargo, and Hong Kong Air Cargo Carrier. In addition, home carrier Challenge Airlines is also amid a fleet expansion allowing the capacity provider to add routes to India and China to its existing intercontinental network, served with modern freighter aircraft.

Unlike some of its competitors, LGG can offer airlines, forwarders, and ground handlers some attractive conditions for doing business at the Belgian airport: There are abundant free slots, the ground infrastructure has been permanently expanded and adapted to the growing traffic needs, and the airport is easily accessible for feeder services via the upgraded road system. In addition, there is a management team that has always an open ear to the concerns of the freight industry. Cargo airlines are welcome and not just tolerated as an appendix of passenger traffic, as is the case at some other airports where, only recently, air freight operators were hyped as “life savers” during Covid times. 

FedEx takes a U-turn
A special role is played by FedEx. In early 2022, the integrator transferred two-thirds of its operations from LGG to to Paris CDG, leading to a massive reduction of flights at the Walloon Airport, conducted particularly at night times.  Now, the Memphis, Tennessee-headquartered express company announced plans to return, driven by the strategy to use Liège as intercontinental European air freight hub by operating daytime flights to/from the USA with B777 freighters. The new aeronautical fee mechanism introduced in 2023 has made daytime ops financially much more attractive for airlines compared to night flights. Hence, carriers operating modern fleets benefit from this pricing policy. Others pay, like owners of B747-200 and 400. The movements of these aging and noisy aircraft went down from formerly 1047 movements (January/February 2023) to 946 movements during the first two months of this year. That’s a reduction of 10%, and more than 72% of these movements are now carried out during the day. And times get even tougher. Because the new operating scheme prohibits these aircraft from taking off at night from 2030 onwards,” says CEO Laurent Jossart. So most of the affected carriers, traffic data evidence, have skipped their night flights and operate at daytime meanwhile.

Brussels pharma community applauds LCAG’s direct freighter service

Marcel Schoeters
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Brussels pharma community applauds LCAG’s direct freighter service

The Brussels (BRU) cargo community as well as the Belgian pharma shippers are delighted about Lufthansa Cargo’s decision to launch a direct cargo service from BRU to Chicago ORD.The first B777F flight will be launched on 03APR24, and operated twice a week thereafter, on Mondays and Wednesdays.

Currently, LH Cargo operates 17 B777F, with number 18 joining the fleet soon – courtesy LHC

The entire routing will lead from Frankfurt via Brussels Zaventem to Chicago O’Hare and back to the freight airline’s home hub at Rhine-Main Airport. This is the first time the carrier has connected Belgium directly to the American continent with a cargo aircraft. LCAG is particularly focused on Brussels Airport’s pharma segment.

Freek De Witte, Director of Air Cargo Belgium, says that the cargo community is very pleased with this new connection and especially with the additional full freighter capacity it will bring.

“United Airlines also provides a passenger service between Brussels and Chicago, but now we will also have main deck capacity. Lufthansa has been active at the airport for a long time, but even then, it is nice that a legacy carrier has now decided to bring in freighter capacity, as well.” Mr. De Witte thinks that filling this capacity will not be much of a problem, since he has understood that the new service has been introduced at the request of some freight forwarders.

Pharma.aero Chief, Frank van Gelder, knows the pharma business from A to Z – courtesy of Pharma.aero

Capacity needs
CFG asked Frank Van Gelder (FVG), Secretary-General of Pharma.aero, what the new service means for the pharma shippers.

CFG: Does this new service play into a need for extra capacity, Mr. Van Gelder?

FVG: It does as, if we look at this specific commodity, pharma is a growing commodity in air cargo. This phenomenon is influenced by the continuous growth of the world population, especially in the number of elderly people. This increases the direct demand for more chronic therapies for chronic conditions.

On top of this, we notice more possibilities in the treatment of oncological conditions because of the exponential growth in the new generation of mRNA cancer vaccines, which accelerated after the pandemic. This leads to pharma being an even more high-value product, with little room for delay, so that we must be able to operate with a very small error margin.

Then there is also the further exponential increase of clinical studies, to date over 45,000 internationally, within the range of new therapies. This happens to create an important flow between the U.S. and Europe, which is the direct answer to your question. This new service will steer the demand for capacity in which enough and reliable air cargo uplift must be guaranteed. Chicago is one of the premier pharma hubs in the U.S., especially as a transit pool thanks to its connectivity network.

Part of the strategy

CFG: Is this another confirmation of the role of BRU as a pharma hub?

FVG: I don’t’ think this confirmation is still necessary. Apart from all the other growing pharma business, Brussels Airport has handled over 3 billion COVID vaccines. I do not think that we should see this as an upgrade. For me, as an observer of these activities, it is part of the business strategy. As a cofounder of Pharma.aero, Brussels Airport had very soon seen the light in the tunnel, realizing that only a tailormade and specifically developed pharma strategy is imperative to meet the quality demands these consignments imply.

The strengths of Brussels Airport are its vision on air cargo and pharma, and the strong community built together with Air Cargo Belgium. I am not surprised that a ‘home carrier’ like Lufthansa Cargo, of which Brussels Airlines is a part, focusses on a full freighter operation between Brussels and Chicago. This will enable Brussels Airport to keep its lead, as it is a continuous investment in this spearhead program. “Lead by example” is certainly applicable to the Brussels Airport cargo team and the community as a whole. There is indeed a clear pharma spirit on the cargo side of Brussels Airport.

Small volume, high value

CFG: Seen from a broader perspective, what does the pharma market between Europe (Belgium) and the U.S. look like?

FVG: Europe remains the main export pool for pharma air cargo globally. 50% of the global production is between 5 countries, with the U.S. accounting for 27%. Europe is the main producer of finished high value treatments.

The total air cargo volume is not very high, 3.59%, which is very low compared to e.g. e-commerce. But the street value of what is being flown is extremely high and accounts for 5.58% of the global air cargo profits. With new therapies around ATMP (Cell and Gene Therapy), we see very strong investments and developments in the U.S. as well as in the EU, in which Belgium plays a considerable part. Until today, this is merely an export story, but these flows follow the developments in the future markets and may turn very quickly.

In other news: LCAG renews and expands CargoIS agreement
The International Air Transport Association (IATA) announced that Lufthansa Cargo has renewed and expanded the scope of its agreement to utilize CargoIS, which provides comprehensive market intelligence on the air cargo industry.

As part of the new agreement, Lufthansa Cargo will also join the IATA CargoIS Direct Data (CDD) contribution program, the carrier announced. This initiative facilitates the collective sharing and pooling of anonymized data among participating airlines. It empowers stakeholders to benchmark performance, identify industry trends, and make well-informed decisions within the competitive air cargo sector.

Spotlight on… Ray Wood, Head of GCM, Cencora

Brigitte Gledhill
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Spotlight on… Ray Wood, Head of GCM, Cencora

CargoForwarder Global’s ‘Spotlight On…’ series illustrates the many and very different jobs in the air cargo industry by talking to individuals in those functions. Much goes on behind the scenes to ensure that cargo flies from A to B safely, efficiently, and on time. This week, Ray Wood (RW), Head of Global Carrier Management (GCM) at Cencora World Courier takes us through his daily business, tells us how he got involved in our industry, and gives solid advice to those considering a career in air cargo.

Watch and listen! We know what we’re talking about. Image: Ray Wood

CFG: What is your current function? And what are your responsibilities?

RW: I am Head of Global Carrier Management at Cencora World Courier. The GCM responsibilities extend to maintaining and developing carrier relationships, including but not limited to: Service, Quality, Network & Innovation. Also, the delivery of initiatives back to our Global Operations to support shipment integrity under stringent regulation & customer expectation.

CFG: What does a normal day look like for you? Or is there such a thing?

RW: Normal doesn’t come into it, that’s what makes it exciting. The plethora of challenges, support requests & solution discovery, keeps my passion at its highest level. Ultimately, having the knowledge of knowing what you do makes a massive difference – especially working with life changing/saving consignments.

CFG: How long have you been in the air cargo industry, and what brought you to it?

RW: I am now in my 37th year in the industry. Whilst as a 16-year-old, there were multiple choices for a vocational direction, living under the flightpath at Heathrow truly influenced my direction to aviation, ultimately air cargo.

CFG: What do you enjoy most about your job?

RW: Knowing that what you do really does have a consequence. Keeping your awareness heightened, ensuring a cancer patient receives their Autologous treatment. Or navigating an end-to-end solution between obscure origins & destinations.

CFG: Where do you see the greatest challenges in our industry?

RW: The industry continues to overcome its biggest challenge with the Global Pandemic. All involved in this gloriously merciless but so rewarding industry, can hold their heads high with how we navigated our way through. The pandemic’s positive effect on the industry is the speed of change that is now happening – long overdue and a kick in the pants that was required. Greater & greater regulation ensues, and keeping ahead of the curve can be a challenge.

CFG: What advice would you give to people looking to get into the air cargo industry? Any particular training they should aim for?

RW: I sincerely hope people are interested to get into this industry. I’d advise that this isn’t just a job, it’s a way of life.

Remember that whilst over the years, the industry has gained a brain, the balance with heart is so important. We are a people industry despite automation & digitization.

Make sure time is well spent in all aspects of what we do.

Academic qualification is important, equal to experience & knowledge. Watch & listen to the ‘old timers’, as we know what we’re talking about! [Laughs]

CFG: If the air cargo industry were a film/book, what would its title be?

RW: Against All Odds – speaks for itself really. Full of romance, jeopardy, risk & reward. A great soundtrack too

Thanks for all these insights, Ray!

If you would like to share your personal air cargo story with our CargoForwarder Global readers, feel free to send your answers to the above questions to cargoforwarderglobal@kopfpilot.at We look forward to shining a spotlight on your job area, views, and experiences.

WCS 2024: Dragon Dances and Dynamic Discussions

Olga Romanova
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WCS 2024: Dragon Dances and Dynamic Discussions

Almost 2000 participants descended on Hong Kong for the 18th IATA World Cargo Symposium (WCS) last week. The event, hosted at the AsiaWorld-Expo by IATA along with the island’s native airline Cathay Pacific and Hong Kong International Airport (HKIA), ran from 12MAR24-14MAR24 and brought together a diverse array of experts from over 70 countries. As always, the WCS served as a pivotal platform for discussion and shed light on crucial themes such as safety and security, digitalization, and sustainability, all with a view to exchanging ideas and collaborating to shape the future of the global air cargo industry.

Colorful dragon dances are part of the Chinese culture, celebrated at every major event – visuals: CFG/or

Dragon Dance Opening.

The event began with a stunning performance: the traditional dragon dance on stage. This allowed participants to connect with the local culture right from the start, creating a memorable and engaging atmosphere.

The symposium started following a warm welcome from Paul Chan, the Financial Secretary of the Hong Kong government, who highlighted Hong Kong’s pivotal role in the Asia-Pacific region, handling over 4.5 million tons last year. Mr. Chan expressed optimism, outlining plans to return to pre-pandemic levels in both passenger and cargo sectors. He also presented the vision for HKIA’s development, highlighting plans to expand air connectivity for passengers and cargo, and emphasized the airport’s commitment to green aviation, noting that Hong Kong (HKG) has pledged to achieve net zero emissions by 2050.

Cargo Year in review.

Brendan Sullivan, the Global Head of Cargo at IATA, underscored the increasing importance of air cargo, particularly evident amid recent events such as the Red Sea conflict. Sullivan emphasized that air cargo plays a critical role both in responding to natural disasters like earthquakes and floods, and in addressing geopolitical challenges, highlighting its versatility and significance in times of crisis.

Sullivan emphasized that air cargo not only serves as a vital mode of transportation but also generates employment opportunities worldwide, contributing to sustainable and efficient economic growth. He stressed that, as the industry strives to return to pre-pandemic levels, it is imperative to ensure that growth is efficient, safe, and sustainable.

Progress in ONE Record, safety topics, and FACE

Several significant advancements were highlighted during the opening plenary. Cathay Cargo and Lufthansa Cargo announced the successful implementation of ONE Record ahead of the target date of JAN26, demonstrating proactive industry adaptation. In the realm of safety, a major milestone was achieved with the completion of a draft for a new fire test standard, poised for approval. This standard, once ratified, will apply to fire-resistant containers and fire containment covers for aircraft pallets, enhancing aviation safety standards. Additionally, sustainability efforts are progressing steadily, with the industry committed to achieving net zero emissions by 2050. While collaboration between industry players have been initiated to address sustainability challenges, concerns persist regarding the shortage of SAF supply resulting from the transition to solar and wind energy generation. Lastly, the human element remains paramount in driving improvements in air cargo. IATA continues to support initiatives such as the Competency-Based Training and Assessment (CBTA) Center, the FACE program, and the IATA 25by2025 initiative, ensuring that people remain at the forefront of industry progress.

Economic outlook.

During the opening, Marie Owens Thomsen, Senior Vice President of Sustainability and Chief Economist at IATA, shared key economic updates with the audience.

She also highlighted risks facing the industry:

  • Uncertainty from unexpected elections and their impact on policies
  • Expected record-high oil and gas extractions in 2024 to secure energy
  • Central banks not planning to lower interest rates due to tight labor markets and high inflation
  • Continued high jet fuel prices and the strength of the US dollar

Despite these challenges, the industry has returned to profitability. Efforts are underway to ensure efficient cargo operations for sustained profitability in the future.

Air cargo market factors, e-commerce, and digitalization

The air cargo market is continually evolving, influenced by various factors discussed by industry experts such as Alina Fetisova from the International Trade Centre, Niall van de Wouw from Xeneta, Cissy Chan from HKIA, and Tom Owen from Cathay Cargo. These factors can be summarized into the following groups:

  • Recovery of Hong Kong airport volumes, expected to be fully restored by the end of 2024
  • Positive outcomes for air freight due to developments in sea freight
  • Increasing restrictions on trade
  • Changing consumer patterns shaping the demands of air freight

Emphasize was placed on the significance of e-commerce and consumer behavior. It was noted that the air cargo industry is encountering challenges in efficiently managing individual shipments, highlighting the importance of stakeholders in effectively handling the associated data for each piece.

Thomas Yu, Senior Director Global Hub Operations, Cainiao commented “Harmony across the entire journey is important for the physical shipments flow as well as well as digital flow of all the stakeholders involved.”

The conversation involving Irene Lau, Assistant General Manager of Aviation Logistics at HKIA, Ingrid Lee, Head of Cargo Digital at Cathay Cargo, and Andres Bianchi, Chief Executive Officer of LATAM Cargo, concluded that there is a collective need for a paradigm shift towards embracing new mindsets in alignment with emerging digital tools and developments within the industry. They underscored the importance of collaboration among stakeholders and the sharing of best practices as integral components of this transformation.

Irene Lau commented: “Driving digital transformation is not only about the technology; we need to get a digital mindset, open mindset to approach the change management.”

Ingrid Lee added: “We have to work as one team by putting aside the company’s interests and collaborating towards positive directions.”

People in Air Cargo.

One of the last panel discussions during the first day was dedicated to the people. Wilson Kwong, CEO of HACTL, stated that it remains challenging to find and attract talent in the industry, citing factors such as the distance of commuting to the airport, salary considerations, and the perceived career paths within the industry.

AlAnood AlSuwaidi, SVP Cargo MEAA at Menzies Aviation, emphasized the importance of keeping individuals engaged and included in the industry, while also ensuring that they have clear career goals.

Janina Meininger, Business Development Manager at CHI Deutschland Cargo Handling GmbH, provided valuable insights from the perspective of the younger generation. She highlighted the significance of engaging with young potentials early on, promoting the industry’s perspectives while emphasizing the importance of mentoring and embracing individual strengths.

To conclude the first day of the WCS on the people topic, the finalists of the IATA FACE UP competition were presented to the audience. These young talents included Niclas Scheiber from Frankfurt University of Applied Sciences, Erik Goldenstein from Fraunhofer, and Arjan Bhogal from Buckinghamshire New University.

Exclusive – Virgin Atlantic Cargo prefers to play foul

Heiner Siegmund
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Exclusive – Virgin Atlantic Cargo prefers to play foul

Many English terms have found their way into the languages of our world. Lately, this has increasingly been happening in the digital space. Words such as ‘online’, ‘homepage’, ‘website’, etc. are recognized in many languages. In contrast, ‘fair play’ is a timeless classic term. It expresses an attitude of consideration, respect and tolerance towards others, whether in sport, politics or business. What is currently happening at Virgin Atlantic Cargo, however, is more foul play than fair play. As evidenced by a contentious GSA tender recently launched by Virgin Cargo in Europe.

According to investigations conducted by CargoForwarder Global and based on documents, newcomer Azure Air Cargo Ltd. of Bracknell near London, is at the center of this objectionable case.

The company was entered into the commercial trade register of Bracknell on 20DEC23, under the registry number: 15363732. The founding document vaguely mentions ‘management consultancy activities’ as the main purpose of its business, without an explicit reference to GSA tasks.

Critics accuse Virgin of unethical behavior in its tender policy – photo: courtesy Virgin

Steve Buckerfield in a dual role
Steve Buckerfield is Head of Cargo Sales at Virgin Atlantic. Steve, who also co-owns Azure Air Cargo, is currently on sabbatical until further notice. This is stated in a letter to customers, written by Phil Wardlaw, Managing Director Cargo at the UK carrier. “He will be working independently in relation to a response to the RFP [tender] to implement a new EU operating model… [This] is why he is now on a period of sabbatical leave.”

RFPs allow its initiators to find out more about the supplier’s company. Suppliers must describe the requested goods/services in detail and often also complete a special questionnaire.

Questionable information disparity
Buckerfield has had firsthand information and obviously had a lot of insightful insight information before he went on a sabbatical. This entire setting offers Azure a unique opportunity to secure itself a big slice of the Virgin cargo cake. After being awarded the master contract, it could conclude deals with local sub agents, as indicated by sources to CargoForwarder Global. This is very likely, since no other contender has this insider knowledge compared to Buckerfield and his Azure. If so, it would distort basic competition rules. 

Violation of compliance rules
Following the restructuring of Virgin’s EU operating model which, of course, has to be finally approved by Phil Wardlaw and management, Buckerfield could potentially return to his previous post at Virgin Cargo if his Azure Air Cargo would not be awarded the tender. There, he would need to work again with the same colleagues that didn’t select his company, which would create an awkward working relationship.

Obviously, the chances for him to win the contract with inside knowledge and possibly sr. management support within Virgin Cargo, are far greater.

For him, a golden era might begin as he would benefit either way: as a senior executive at Virgin Atlantic Cargo or in his role as co-owner of a company that has become a close partner in Virgin’s freight activities. If this were to happen, and there are many indications that it will, the behavior would not only be unethical, it would also violate applicable compliance rules.

Foul instead of fair play
Fair play looks different. Other contenders losing out in the tender will probably call it foul play because of Buckerfield’s insider knowledge and the information privilege of his Azure Air Cargo Ltd. They must feel like the noble knight Don Quixote, who unsuccessfully battled windmills.

Virgin Atlantic Cargo operates a large fleet of passenger aircraft carrying air cargo in their lower deck compartments. Continental Europe contributes most to the export volumes, while the UK accounts for the remaining. All consignments contributed by the industries in mainland Europe are trucked to Heathrow. Only exception in Europe is a freighter flight connecting Brussels with Heathrow.

CargoForwarder Global reached out to general sales agents who represent Virgin Cargo in Europe, such as the Kales Group or the ECS Group. While ECS no responded, Kales Airline Services declined to make any comment on the process and suggested to contact Virgin Atlantic Cargo directly for feedback. This has been done last Thursday (14MAR23). However, a message left on the voicemail of Virgin Cargo’s communication department with an urgent request for a callback was left without reaction until this CFG issue was published.

Louise Gallagher, PR Manager Virgin Atlantic sent this reaction to our article, asking us to display it online. We certainly comply with this request, HS. “Our plans for 2024 include the implementation of a new EU operating model, designed to improve our customer journeys, drive incremental revenue and grow market share. We’re in the preliminary stages of a tender process and are currently awaiting proposals from a number of our European GSAs. As with all business procurement decisions, we’re committed to ensuring a robust and fair process throughout, which is fully compliant with our independent procurement and legal procedures.”

Air Greenland and CHAMP collaborate

Heiner Siegmund
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Air Greenland and CHAMP collaborate

The Arctic carrier adopts the majority of CHAMP Cargosystems Cargospot products in 2024. The upcoming technical collaboration is a step forward in Air Greenland’s digitalization and modernization strategy, emphasizes the management of the national airland of Greenland. Although little mentioned in international aviation and transport publications, Air Greenland has a history stretching back over 60 years. Now the carrier has become a new CHAMP customer, this way benefitting from the majority of the Cargospot suite features offered to CHAMP customers, including Cargospot Airline, Cargospot Handling, Cargospot Mobile, Cargospot Revenue Accounting, Cargospot AirMail, and Cargospot Portal. This will enable Air Greenland to leverage CHAMP’s industry-leading library of APIs, including thrilling AI and ML features, states the carrier.

Based in Greenland’s capital city Nuuk, the airline runs a number of remote offices and warehouses that face unique requirements. The country is largely serviced by air cargo and air mail due to its vast, glacier landscape. This makes air cargo operations a staple of Greenland’s unique ecosystem, and a pivotal part of staying connected to the rest of the world.

By investing in specialized tools and platforms such as Cargospot Mobile, Cargospot AirMail and Cargospot Portal, Air Greenland has demonstrated their commitment and passion for meeting the unique needs of their home market and championing Greenland’s economy. These services will support Air Greenland’s numerous remote operations with more visibility, enhanced connectivity, and collaboration, reads a company release.

According to Air Greenland, the Cargospot products adopted by the carrier are the most widely used, sophisticated and comprehensive cargo management systems worldwide. The airline will enjoy the competitive benefits of digitalized processes, seamless integration with external tools, enhanced productivity, and greater efficiencies.

Søren Nørsø Head of Cargo at Air Greenland noted: “CHAMP’s unique range of offerings are a perfect fit for the needs of our company and the community we operate in, so we are very excited about our future. By investing in CHAMP’s open and interconnected systems that facilitate collaboration across remote teams, we are strongly positioned to grow in the years that come.”

Isha Knight, Senior Sales and Account Manager from CHAMP welcomed the decision and said: “It’s our pleasure to provide Air Greenland with the tools and platforms necessary to deliver a world-class experience for their community. This has been an exciting partnership, and we look forward to their continued success powered by the Cargospot product suite.”

Cargolux frees lions

Heiner Siegmund
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Cargolux frees lions

“We have embarked on a roaring journey,” exclaims Richard Forson, CEO Cargolux in a LinkedIn displayed video, referring to the flight of two brother lions to freedom. Their names: Tsar and Jamil. Both animals were held in captivity during their entire lives and brought to a Belgian rescue center in 2022 after Russia invaded Ukraine. From Luxembourg they now flew on board a Cargolux Italia freighter to South Africa to their new home in a local nature reserve. The entire project, enabled and supported by the Born Free Foundation “is a great step in the rescue of captive animals,” stated Richard Forson, CEO Cargolux in a video clip shown on LinkedIn.

Troubled life in captivity has ended for Tsar and Jamil – courtesy: Born Free Foundation

After arriving in South Africa, following a health check, the crates with the two brother lions, just three years old, were loaded onto a lorry and driven to Born Free’s Big Cat Sanctuary at Shamwari Private Game Reserve located in South Africa’s Eastern Cape Province.

Upon arrival, Tsar and Jamil were welcomed by Born Free Manager Catherine Gillson and the rest of the Animal Care team, who observed their transfer into their new, spacious sanctuary home, and provided the lions with their first meal after the long trip.

Over the coming weeks and months, the Born Free Foundation’s teams of animal keepers and vets, headed by Dr. Johan Joubert will monitor Tsar and Jamil to ensure they are settling in well in their forever home. Born Free is committed to providing a safe home and expert care to the brothers for life – which for lions could be up to 25 years. Tsar and Jamil are the 58th and 59th lions the Born Free Foundation has rehomed over the past 40 years.

Born Free’s Head of Rescue & Care, Maggie Balaskas, said: “We’re delighted to offer Tsar and Jamil a lifelong home. At Shamwari they will be lavished with loving, expert care. They will be able to live the rest of their lives peacefully, in spacious enclosures amidst Africa’s natural fauna and flora.”

Since Tsar and Jamil were born in captivity and taken from their mother at a young age, they have never been given the opportunity to learn essential life skills they require for survival. These include how to hunt, stalk and capture prey for food, as well as skills required to live in a pride, understand hierarchies and deal with conflict.

Animals that have early and extensive exposure to human care often never regain their natural, instinctive fear of humans. This means that, as adults, they are more likely to enter areas of human activity such as, villages and settlements where, understandably, they are perceived as a threat and could come under attack. For all of these reasons combined, Born Free does not currently attempt to reintroduce or release any big cats back to the wild. Instead, the organization gives them the best possible captive life possible and use their story to try and prevent further cases of wild animal exploitation, is stated by the Born Free Foundation.

Ethiopian Airlines Cargo introduces first e-commerce logistics facility

Heiner Siegmund
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Ethiopian Airlines Cargo introduces first e-commerce logistics facility

At a grand event, held in Addis Ababa Bole International Airport, the African carrier launched a sorting and distribution terminal for e-commerce shipments and mail services. The newly built facility is aimed at bridging logistical gaps and positioning Addis Ababa as the cross-border e-commerce logistics hub for the African continent and beyond. The building is equipped with state-of-the art technology and meticulously implemented systems, states the airline in a release. As a result, the facility will offer a variety of services including consolidation, deconsolidation, sortation, repacking, labeling and more. Customers can now track and trace their shipments effortlessly from anywhere.

Ethiopian Cargo is Africa’s largest freight carrier – company courtesy

At the launching ceremony of the new facility, Ethiopian Airlines Group CEO, Mesfin Tasew stated: “The inauguration of this cutting-edge e-commerce logistics facility is a significant breakthrough for Ethiopian Airlines Group and the entire African economy. We have implemented high-end technologies in the infrastructure that revolutionize the way goods are transported and delivered in the e-commerce industry in Africa.”

The executive went on to say: “Through this facility, Ethiopian Airlines paves the way for development of e-commerce services in Ethiopia and the African continent. We are glad to witness that our investment of 55 million USD has indeed paid off and enabled us to set the e-commerce industry in the continent to follow the global trend.”

Built on 15,000 square meters of area, the facility boasts a capacity to handle 150,000 tons annually. Encouraged by the trend, the number of e-traders doing business in African countries, besides Ethiopia especially in Nigeria, Ghana, Kenya and South Africa is growing rapidly. There are more than 450 million internet users, which is the second-largest internet-user population on the planet, just after China. However, unlike on the American continent, in Europe or in most East Asian countries, there are severe barriers, since in many African cities there is no address system. For delivering the goods to the customer, it needs a local partner who knows the consumer. Otherwise addresses such as “living in the second street by the supermarket with the red painted door” might lead to delays – at best.

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