A drop in air cargo handling prices is reaching “landslide” proportions as airlines make a capacity-glut problem worse by adding planes, German airline Lufthansa told Bloomberg.
Peter Gerber, who heads Lufthansa’s cargo operations, told Bloomberg on Monday (4 July) that there are 'great problems in air freight, in Germany as well as across Europe”.
“Global growth has slowed, and global trade no longer grows faster than economic activity,' Gerber said. 'Persian Gulf carriers keep adding capacity although it does not pay off, and capacity growth currently is three times greater than demand growth.”
Bloomberg said Lufthansa is restructuring freight operations, cutting as many as 800 jobs in an effort to reduce costs by e80m (US$89m) a year.
The efforts follow two consecutive quarters of operating losses at the cargo unit. Declines in average per-kilogram prices for air freight have been accelerating and now amount to a drop of 15 per cent to 20 per cent, Gerber said.
The German carrier plans to offer new services including air freight shipments for private consumers, and enter into more partnerships like the ones it has with ANA Holdings Inc. and United Airlines, Gerber said.
Lufthansa is also speaking with large air-freight customers including Amazon.com Inc. and Alibaba Group Holding Ltd about possibly serving them directly, instead of the current practice of doing most business with them through forwarding agents. If those ideas materialize, such services could “change the industry,” Gerber said.
