In the next instalment of our senior executive interview series, Anand Kulkarni, head of global markets at Lufthansa Cargo, discusses how the airline is navigating economic shifts, e-commerce growth, and industry trends while embracing digitalisation, sustainability, and customer-centric solutions to stay ahead in a competitive market.

How are global economic conditions affecting the air cargo industry, and what implications does this have for Lufthansa Cargo?

We see three main developments in the air cargo industry. First, due to the dynamic, global environment, air cargo is expected to be in high demand. We saw the effect of the red-sea crisis and typhoons last year on the industry and it is likely that supply chains will remain under pressure from current and unforeseen political, economic or natural events. Such disruptions will continue to drive demand for a reliable, fast, flexible, and secure mode of air transport.

Second, e-commerce will remain a driving force behind the current growth we experience in global air cargo. Especially on the routes from Asia to Europe and the US, this new commodity is creating an additional need for air cargo capacity.

Third, we observe that the global economy, and especially trade, is in the process of adjusting to new realities after Covid-19, but also to political tensions in the world in recent years. Trade is further diversifying and new air cargo markets are benefiting, such as Vietnam and India.

Lufthansa Cargo tackles these challenges and opportunities with a dense global network, which we steer along our customers’ needs and thus follow our purpose of ‘enabling global business’.

In a highly competitive market, what differentiates Lufthansa Cargo from other major players in the industry?

We believe in being agile to meet the dynamic requirements of our customers, while providing a stable, reliable and high-quality network. With our freighter fleet of 18 B777Fs and four A321Fs, as well as the belly capacities of Lufthansa Airlines, Austrian Airlines, Brussels Airlines, Discover Airlines, and SunExpress, we are able to offer our customers up to 7,500 weekly flights to 350 worldwide destinations. We provide our customers with diverse and efficient routing options via our multiple hubs in Frankfurt, Munich, Vienna, and Brussels. In the near future, we are excited to welcome ITA Airways and its hub in Rome as the latest addition to our customer offering.

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What major trends do you foresee impacting the air cargo industry in the next five to 10 years?

We anticipate that e-commerce, as one of the fastest growing industry branches, will further impact the air cargo industry in the coming years. Therefore, demand is likely to increase, especially from Asian destinations. With rising volumes, the need for long-term capacity commitments like charter or allotments will also grow.

Another trend that will change the way we do business will be supply chain diversifications across all modes of transport, as reaction to disruptions require flexibility and agile transport solutions.

Additionally, sustainability and digitalisation are and will remain important topics for the entire air cargo industry.

How is Lufthansa Cargo leveraging advancements in digitalisation to optimise operations and drive efficiency?

At Lufthansa Cargo, we are committed to leveraging artificial intelligence (AI) and automation to enhance our operations and deliver superior customer service. We have successfully implemented several promising use cases that highlight the potential of AI and automation to improve efficiency, reduce costs, and drive innovation.

For example, taking the first steps in automated rebooking in the event of unforeseen flight changes at the Frankfurt hub, or automated written statements in our service centres. This enables Lufthansa Cargo to respond to customer enquiries more quickly and efficiently, especially in irregular situations, which has significantly improved the customer experience.

Looking ahead, we plan to continue investing in new AI and automation initiatives. By embracing cutting-edge technologies, we aim to stay at the forefront of the air cargo industry and provide exceptional value to our customers.

With its involvement in the IATA ONE Record initiative, Lufthansa Cargo is a pioneer in the digitalisation of the air freight industry and is actively working to establish an open industry-wide data standard to make progress in digitalisation benefitting all – including shippers.

How are customer expectations changing, and what steps is Lufthansa Cargo taking to meet and exceed these expectations?

As we are all now used to online shopping with very short delivery times, customers of course ask for fast and reliable transport options. Therefore, we always keep an eye on efficiency and saving time, where possible.

One measure we have taken is the introduction our newest speed option ‘td.zoom’, which offers even shorter transit and handling times. Among many other advantages, our customers benefit from 24/7 premium customer service, as the need for fast communication, is also growing.

Another important step in the development of Lufthansa Cargo and its central cargo hub at Frankfurt Airport is the ‘LCCevo’ project. With an investment of almost €600 million, we are focusing on a comprehensive modernisation plan by 2030, which will make the Lufthansa Cargo Center (LCC) Europe’s most modern airfreight hub.

Air cargo remains a people business, and to understand and exceed customer needs, we as an organisation are working closely with partners from the entire value chain – especially forwarders– but also airports, handling agents, IT providers, etc., to drive continuous improvement in the industry.

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Can you discuss Lufthansa Cargo’s efforts towards sustainability and how you are addressing environmental concerns within the industry?

As a leading international cargo airline, we enable global business and connect economies as sustainably as possible. Lufthansa Cargo is pursuing a clear strategy for a more sustainable future and together with the Lufthansa Group and partners, has set itself ambitious climate protection targets. We aim to achieve a neutral CO2 balance by 2050 and to halve net CO2 emissions by 2030, compared to 2019.

As an airline, our greatest CO2-saving potential lies in the air. In addition to the use of sustainable aviation fuel (SAF), more sustainable aviation also requires major efforts for a modern fleet and efficiency improvements in flight operations. In 2024, fuel efficiency measures have saved approximately 9,000 metric tonnes of kerosene, or 28,000 metric tonnes of CO2 emissions.

Since October 2021, we have switched our long-haul fleet completely to the Boeing 777F – today’s most modern freighter with the best environmental performance in its class. We received our latest B777F last summer, helping to make air cargo more sustainable. Another seven Boeing 777-8 freighters featuring the latest technology have been ordered and are expected to be delivered by 2030.

Reflecting on your role as a senior executive at Lufthansa Cargo, what significant lessons have you learned about your organisation, and also of the dynamics of the air cargo industry?

Let me start with the dynamics of the air cargo industry. First, it is becoming very clear that adaptability is no longer a competitive advantage, but rather a fundamental need to compete in the highly volatile market environment. Be it adapting your network or even parts of your business model – the timeliness of these changes have a big impact on the bottom line.

Second, while the industry has been notoriously slow in the past to adapt to digital solutions, these will play a fundamental role to drive efficiency and growth. Close collaboration between all relevant industry partners will be the key to truly harness and unlock the growth potential presented by digital and AI solutions.

Lufthansa Cargo has been a pioneer in several industry topics over the past couple of decades. It gives me immense pride and joy to be surrounded by colleagues who have been instrumental in shaping the industry, and also by the younger generation who are defining the digital- and innovation-driven future of the industry.

Where do you see the biggest opportunities for growth in the air cargo sector, and how is Lufthansa Cargo positioned to capitalise on these opportunities?

Our world is becoming more and more complex, this is also true for global trade and economic developments. Therefore, offering flexible solutions along the supply chain is crucial to grow in this challenging environment. Especially with our subsidiaries within Lufthansa Cargo, we can offer exactly that.

Our wholly owned subsidiary, heyworld, focuses entirely on the needs of the e-commerce industry. The offer is aimed in particular at online retailers, digital marketplaces, webshop providers, and freight forwarders and includes configurable, transparent and reliable transport solutions.

Additionally, our subsidiary CB Customs Broker offers all standard customs procedures across various industries, as well as automated complete solutions. It is the first customs clearance agency in Germany to have fully digitalised the necessary customs clearance processes by using its own e-commerce customs clearance software.

With time:matters, we have an expert in time-critical emergency transport and customised supply chain solutions with over 20 years of experience in the industry. I’m confident that Lufthansa Cargo is very well positioned to capitalise on the current and upcoming market opportunities, given our knowledge, expertise, and customer-centricity.

OTHER INTERVIEWS IN ABN’s CARGO AIRLINES SENIOR EXECUTIVES INTERVIEW SERIES:

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• Stanislas Brun, Etihad Cargo – read now
• Lars Jordahn, Maersk Air Cargo – read now
• Maksym Sanotskyi, Antonov Airlines – read now
• Teddy Zebitz, Saudia Cargo – read now
• Hamdi Osman, SolitAir – read now
• Anna-Maria Kirchner, Finnair Cargo – read now