Air France-KLM’s de Nooijer says perishables, e-commerce key to turnaround

Ever since Marcel de Nooijer was appointed executive vice president Air France-KLM Cargo at the end of 2016, he has focused on restoring the cargo division of the legacy carrier to its former glory after several years of less-than-stellar results. At the end of 2017, the carrier began to see some sustained improvement, with a 3.3 percent year-over-year increase in revenue tonne kilometers (RTK) in the fourth quarter, and a 1.8 percent rise for the entire year. Since then de Nooijer has sought to keep the momentum going with new initiatives in 2018. For instance, at IATA’s World Cargo Symposium (WCS) in March, Air France-KLM announced the rollout of its cloud-based data-sharing platform, providing real-time shipping information for horticultural products via the Holland Flower Alliance, which the carrier formed last year with Royal FloraHolland and Amsterdam Schiphol Airport. Air Cargo World sat down with de Nooijer in Dallas, right after WCS, to discuss the dramatic turnaround for Air France-KLM in recent months, the rollout of the new IT system, the growth of the Flower Alliance and a change in the way the carrier works with forwarders.

Q: How does the data-sharing tool work for floral shipments?

Marcel de Nooijer: In the flower market, there were concerns about the ability of the hub at Schiphol to continue to be a key player in horticultural goods. Working with Schiphol’s Smart Cargo Mainport Program, we took all the shipment data – the types of flowers, the number of flowers in each box, the number of boxes – and linked it to the air waybill via an online portal, which then generates a unique GLN code that gives users access to the data in one place.

Q: What are some of the parameters measured by the Flower Alliance portal?

MdN: We aim to measure temperature and time the flowers were shipped, and there is a real value in

that. If you know that a shipment took longer than the optimum time to preserve the vase-life of the flowers, they can be auctioned off at a cheaper price. Or you can decide that the distribution market should not be some place farther away, like Russia, where you’d have to pack them in dry ice. Instead you keep these shipments nearby in the Netherlands or Germany, which has a shorter transit time.

Q: How is Accenture software rollout progressing?

MdN: It’s a very large job – we are an organization consisting of two airlines and, as a result, we also carry with us sufficient legacy systems. They did not always mesh well with one another. But this is all changed now with Accenture. We are introducing at once a holistic view of inventory, using one system to make a true booking order, so we have one single source of truth in the company. We were able to reduce a significant amount of legacy systems, so you have this very transparent, very clear overview of your inventory, schedule and availability.

Q: In what ways is AF-KLM adapting to e-commerce demand?

MdN: We’re actually developing new business models as we speak. Not too long ago we formed a partnership with Parcel International and Schiphol Airport and the three of us have set up a company called 12send, which is capable of delivering a same-day delivery product across Europe. That has great potential. We have a perfect network for this type of delivery, with our narrowbody fleet that flies to

all the major metropolises of Europe a couple of times a day. We’ve had to make some IT changes, which was very difficult because you have to mix freight processes with baggage handling processes. But now we have the ability to mix the cargo with the passengers, so it’s actually only one process. That is essential to 12send because, due to the heavy competition, turnaround times are extremely important. The more complex processes you have on your narrowbody fleet, the longer the handling time will take.

Q: How have new fleet configurations changed how airlines work with forwarders?

MdN: Another important step we’re taking is by changing our footprint – using six freighters and a higher amount of belly capacity – you also see that there is also the benefit of approaching small and mid-sized forwarders (see cover story). In the past, we did work with them, but both of us had limited resources. But now, with the state-of-the-art technology, we’re actually capable of providing much more dedicated and fine-tuned services. We rolled out a program last year, called What Counts, consisting

of dedicated offers, IT tooling, specific service packaging and loyalty programs for small to mid-size forwarders. The system knows, based on history, what types of business these smaller entities provide, and we can proactively send targeted, personalized messages to the forwarders about the lanes in which they typically operate. And that’s really appreciated in the Dutch market. In the first year, our market share [among SME forwarders] reached close to 4 percent. Now we want to roll it out to other markets around the world.

Q: What else is on the horizon?

MdN: Last year was also successful for forming new partnerships. We’re proud of the work we have been doing together with Jet Airways Cargo. Our network presence into India was not as strong as we’d liked it to be, but together with Jet Airways, we are really making our sincere offer to the market. We’re moving in the direction, within the coming two years, to make it a full joint venture. The initial results we get out of that are very rewarding.