Swiss WorldCargo targets import sales
Stepping out of the economic bunkerto take advantage of air freight market growth.
By Eric Kulisch
Swiss WorldCargo, which weathered the global recession better than most competitors, plans to counter the traditional industry focus on export sales and pitch its services to shippers on the import side, said Jack Lampinski, managing director for the Americas.
'As a company, we've decided to pay a lot more attention to import sales, which we think are grossly ignored in the industry,' Lampinski told reporters May 3 during a meeting at the Cargo Network Services conference in Miami.
Air carriers tend to neglect importers because their performance is largely based on export revenue, Lampinski said in a follow-up interview. Swiss sees a big opportunity because three-quarters of all shipments are paid for by the importer or consignee at destination, even though the arrangements are made by the supplier or freight forwarder in the exporting country. And importers often dictate to their suppliers which carriers they want to handle their freight.
'Import customers are ignored unless there's a problem with their shipment. We want to be more proactive' and talk to the import manager when the company makes sales calls, he said.
The premise of the new strategy is that each region in Swiss' network can drive business to another part, thereby stimulating overall volume and improving customer relations.
'If we take this on as an entire network project, the chances are that I increase my exports because of import sales at destination. So the key is we need to take it on as a company project,' Lampinski said.
The effort is the latest sign that Swiss WorldCargo has stepped out of the 2009 economic bunker to take advantage of positive growth in the air freight market during the past seven months.
As previously announced, Swiss International Air Lines on June 2 will launch a six-times-per-week service using Airbus A340-300s between Zurich and San Francisco. The new service will give the Swiss cargo division 500 tons of additional capacity per week, essentially doubling its existing West Coast volume to Los Angeles.
It is the airline's first route expansion since 2008.
Swiss WorldCargo experienced a 60 percent profit decline last year, but the fact that it made a profit stands in contrast to most international carriers' cargo divisions.
The cargo division responded to the downturn by adjusting its costs, but the airline lost market share because it refused to slash prices to compete, Chief Cargo Officer Oliver Evans said during a CNS panel discussion.
Swiss was able to shorten working hours for its staff and still retain employees under a Swiss government program that helps pay part of an employee's wage gap. The company only returned to full employment at the end of 2009 and has since gained back most of the market share it lost during the depths of the recession, he said.
The cargo load factor, or aircraft utilization, increased 16.3 percent to 83 percent during the first quarter and January tonnage was the second-highest since 2004, according to the airline.
Unlike some combination carriers that also operate freighters, Swiss WorldCargo did not have to make any decisions about adjusting its network in response to falling demand. That allowed the executive team to focus on customers, he said.
Swiss International is five years removed from its acquisition by Lufthansa AG, which rescued the company from bankruptcy. It finished the first quarter with a 10 million Swiss franc ($8.8 million) operating loss, the first of its kind in five years, due to unfavorable currency circumstances, high jet fuel prices and low yields.
Swiss is also exploring how to better leverage its hub in Zurich, according to Evans.
The airport's geographical location at the crossroads of Europe, its small size, short cutoff times, fast transfers and efficient customs release have governed the airline's strategy of specializing in high-value and perishable goods that require expedited transit and customized handling. Other airlines try to jump into the temperature-controlled market, for example, but aren't able to execute well because they haven't factored in the extent to which such service adds complexity and cost to their general cargo operations, he said.
The company wants to engage the airport authority and third-party operator Flughafen Zurich AG on ways to improve the airport's infrastructure.
Expansion is difficult because of the airport's intersecting runways and political opposition. The lack of space is a major obstacle to increasing Zurich's cargo volumes, which don't deliver any tangible economies of scale. The company is also constrained by a nighttime trucking ban, which prevents late-arriving goods from being distributed immediately after landing. Operating fees for airlines are also relatively high compared to other European airports.
Evans told American Shipper that better logistics facilities and airport infrastructure are needed to continue to serve banks, pharmaceutical companies, specialized component manufacturers and others that depend on white-glove handling of their products.
One positive development is that the airport will begin work this year on a new freight forwarders' warehouse, according to the most recent issue of the Swiss WorldCargo magazine.