Air Cargo - Where to Next

In an industry where speed matters, air freight has lagged behind other industries in adopting digital technology; however, many air carriers are quickly closing that gap. In this session we will discuss the trends in the industry, how air cargo soared last year, and what new innovations the business has adopted to better position them for the future of air cargo.

About the Speakers

Bertrand Martel serves as Customer Success Director for PROS in Paris. With more than 25 years of technology and SaaS expertise, Martel is responsible for building and leading the customer success team to help customers achieve value from PROS solutions and facilitate product adoption, resulting in loyalty and long-term customer retention.

Iris Van Goethem, Vice President Revenue Management at Cargolux Airlines, is a creative and innovative management executive bringing head and heart to any organization. Van Goethem has diversified experience within Educational Services and Hospitality & Aviation industries, demonstrating passion, flexibility, and adaptability in work and life. She is a member of the Female Board Pool Luxembourg.

Mathieu Weber serves as VP Digital Sales & Marketing, leading the transformation of Cargolux’s sales function under the EVP Sales & Marketing. Prior to this, he led and drove the elaboration of the Cargolux 2025 Strategy, reporting to the CEO as VP Strategy & Corporate Development. Before joining Cargolux, Weber was based in Amsterdam, Beijing, and Luxembourg for 13 years, working at McKinsey & Company, consulting with airline and aerospace clients on turnarounds, M&A, strategy/ business development, commercial transformations, and cargo. After completing his university studies in the UK, Weber worked for four years in Sales & Marketing at Rolls-Royce plc in the Civil Aerospace division.

Full Transcript

Bertrand Martel: Hello, everyone, and welcome to Outperform 2021. You know, Air Cargo- Where to Next session. We are hosting here. Cargolux, Iris and Mathieu I’m pleased to join you on this sessions today and thanks for sharing your time with us and share your experience along with PROS. Maybe we can take a few minutes for you guys to get introduced and then we'll move to interactive sessions where we will be sharing the experience that you have been with our solution, Iris....

Iris Van Goethem: Thank you, Bertrand. Thank you for having us here today. So I'm Iris Van Goethem. I'm currently Vice President for Revenue Management and pricing at a Cargolux Airlines based in Luxembourg. We are the number one in Europe, all cargo carrier. I've been here now for about six years and I have a long standing experience within the aviation industry, going over 25 years now. Having worked for others over several legacy carriers here in Europe and also in the US. So happy to be here, Bertrand.

Mathieu Weber: Hello, my name is Mathieu Weber. I'm currently the VP digital sales and marketing. I've been in this role for just over a year now. Before that, I was heading up strategy in Cargolux as well. And prior to that, like, I reserve about 20 odd years of experience in the airline and aerospace business.

Bertrand Martel: Thank you both. And I’m Bertrand Martel running the customer success management team in South Europe, based in Paris, France. And I have the pleasure of being working with Cargolux for a couple of years now. So let's get started, Cargolux has been a regular speaker across PROS Outperform since joining the PROS family in 2019. Looking back across the past two years with PROS as a partner, what made 2021 so special for Cargolux, Iris?

Iris Van Goethem: Ah yes, thank you, Bertrand, that's a great question. I must say it was not only 2021 that was so special for us. I think the last couple of years, given the external circumstances, was special to anyone. But what was really special for us was really since 2019, when we started making a turn. Also through our partnership, we started to organize ourselves in doing different ways in ways that we conduct our business, let's put it that way. And what was really unique was the time to market that we were able to accomplish. Yes, from blueprint to development to testing. It only took six months. I think that is an accomplishment by itself. Of course, it's not only launching because when you launch, it's just starts, right? You think the work is done with the work is just starting and that is what we continue to do. And that was also unique. We launched just an MVP with great success, but we immediately continued developing according to the needs and the feedback of our users. And we did by now, already over 50 adaptations to that initial launch to continue to enhance that. So this was really unique to us. What also is unique is that we created with the system different ways of working, inverse way of working if you want, and actually creating the transparency within ourselves and within our customer was also a stepping stone towards the future.

Bertrand Martel: 2020 was dominated by COVID that completely changed the air cargo industry. We saw capacity vastly diminishing, meaning that the freight operators like yourselves were left with a huge increase in demand. How did you cope with that, Mathieu.

Mathieu Weber: Its 2020 source phased in a little way like a perfect storm, I think there was a range of factors that made the market what it was. I think first of all, half half of the half of the capacity that normally carries airfreight around was not available due to passenger, a long haul flying being simply out of the market. The second point was that with people essentially locked up at home, they could not spend on services. They were mostly spending on goods. Those then also came via e-commerce, which gave another boost to air cargo. Thirdly, you could say that even before the crisis started, most long haul widebody freighters were already flying, so all that could fly was already flying. So there was nothing really that could be added to what was already available as a stock. And then perhaps the last as one of the big factors was basically dead. The issue is that container shipping has been having, which also led to a certain sea to air shift, which which further exacerbated the demand for air freight.

Bertrand Martel: In 2021 the phrase New normal was usually overused. What did Cargolux have to get used to in a new way of doing business?

Mathieu Weber: I think you're right, a new normal is always sort of a buzzword in the immediate short term, but I think if you look in the long term, I think you'll see COVID was probably one period in time in history. Having said that, perhaps the single biggest thing that really sort of emerged from the COVID was the adaptation of carriers moving to what we would simply call a digital way of booking. So through APIs, portals and platforms. So really sort of adapting to sort of embracing what is arguably quite normal in a B2C environment, but to make it more common practice in the B2B business.

Bertrand Martel: When Cargolux and PROS first start engaging the pricing team was a fairly new. Since then, how has a pricing team evolved and how the pricing and the revenue manager's team's role evolved in the organization?

Iris Van Goethem: Well, we're going back to 2015. That is when the pricing team was officially established, not that there wasn't any pricing activity, of course, within Cargolux, but not in the form that it is today. So we started with the team in 2015 and of course, we thought about we had a vision for the future, but we took a conscious decision to not yet sign up with any dynamic pricing partners at that time. Because what we wanted to do first was get organized ourselves who we are, what are our roles and responsibilities? What is in our DNA? What is unique to Cargolux and how we put that together. So having taken the time to put a structure in place, also on the pricing side and on the human part that enables ourselves to determine our best fit for the future. And that is what we did in 2019. We put first solid pricing team together worldwide. While fine tuning all of our processes and our interactions within the company, while also organizing our partners in crime. If you want, which is a capacity management team, because pricing and capacity management, they go hand in hand together. So having set that foundation first, as you very well know, in 2019, we had made our choice or who is the best fit. Now to go further with dynamic pricing for the future. And here we are today.

Bertrand Martel: A key success factor of the project has been change management of the pricing team. How was the pricing team able to engage and steer the rest of the organization?

Iris Van Goethem: Well, firstly, without the support of our C- level here, our pricing team would not have been as successful as they are today because they got the necessary attention they got, you know, the necessary push from up above to drive it down into the organization. So basically rising out of nowhere, we can confidently say that they are today in the heart of the organization. We merit existing talents with new blood, mixing the old with the new while bringing also the right skill sets for the future inside, while capitalizing on the knowledge of the people who have been here already for a long time and marrying those two together, that has proven to be actually a recipe for success. So now launching all this new stuff, it was not only a change for pricing, but actually for the entire organization and for those who were close to it, which is sales and marketing. Yeah so we drive the change within us. We communicate the vision. We communicate a lot. We listen. We we deliver empathy. We adjust ourselves. But we drive the change and we actually drove the change ourselves. And perhaps I don't need to mention it, but inventing new things or inventing new tools is not as hard as driving the change itself.

Bertrand Martel: The Cargolux pricing team compared to other legacy carriers is fairly lean, how is Cargolux leveraging the tools to support that scaling?

Iris Van Goethem: Well, a lean organization allows for transparent and quicker decision making, which in our business is actually crucial to be successful, providing our teams now with the tools or data or the KPIs to take the right decisions at the right time. For us, it means an immediate impact to our bottom line. So taking those tools, taking those data and providing them with meaningful data as to which to take the right decisions from is really the key to success for us.

Bertrand Martel: 21 so the amount of air cargo capacity being sold on digital and customer self-serve platform growth, is this trend here to stay, Mathieu?

Mathieu Weber: Yes, I think so. I think it makes sense to automate processes where it makes sense to automate. At the same time, though, that then also allows to redeploy the skills of our people to focus on value, add tasks. And in that sense, I think it's not a question of going just to digital channels. I think it's a question of thinking omnichannel. I think we will still get bookings via telephone. We will still get them via email, but we think that is sort of automatable can then go through an API, a portal or platform.

Bertrand Martel: Cargolux has focused on driving efficiency to their internal sales team, as well as automating price delivery directly to its partners. What are some of the benefits to leveraging tools to speed up sales, Iris?

Iris Van Goethem: Well, firstly, internally, we actually transformed our teams from doing rather repetitive tasks with little vision on the impact that they really create because it didn't have that visibility that we have today or not, even with much decision making data support behind it. We have transformed them now internally to a new generation of employees, if you want, regardless of how long they have been here with us in the company, but now really seeing instant and the direct impact of their actions on the results. And I can tell you firsthand from the teams that has created. It, not only of course, creates growth, but it creates on the human part, renewed energy and renewed motivation internally. So that was the internal impact. Now externally, of course, for our customers, it's also a big change. When we first launched, we said the first quotes that we send out via our new systems, we immediately call up these customers and get their feedback, and 100% was positive. So it was really an extra motivation and drive to continue with customers and to keep on launching and extending the scope. We are now not only in Europe doing this, but from Europe to US to South America to Southeast Asia. All of this to now is used worldwide in different stages.

Bertrand Martel: What a customer expects from a service provider as change options, price growth, turnaround time, flexibility, et cetera. What is Cargolux noticing on that trend?

Mathieu Weber: I think it's a little bit similar to what I said earlier, I think they were still sort of a mix of using both technology and people to sort of address the customer service so things that can be easily automated and sort of be made self-service that can be put online, like schedule, consultation, things like that. It's quite easy to sort of make it available through to a variety of channels. But on the other hand, at the same time, especially in the business we are in, the business can be quite specific. And then you still need to have someone on the phone to pick up and be knowledgeable. So we continue to invest both in technology and in people to be able to deliver the service level that customers expect from us.

Bertrand Martel: The solution, smart CPQ is helping candidates to speed up the quotations time and response. What are your feedback on that solution in your organization, Iris?

Iris Van Goethem: Well, the speed for Cargolux today to deliver a simple quote to our customer is just 1 minute. So as I said before, we have kind of an inverse way of working. Prior to this, we were looking for all the information to compute the quote, which took time because you have several systems to look for. You have to look for pricing. You have to look for capacity, et cetera, in order to deliver a quote in a very manual way. And today we prepared the systems. There are four to six weeks in advance with pricing models, capacity models, steering models, you name it. We have it. So that by simple couple of clicks, it computes a very accurate and fast quote to our customer, which then becomes a click and book situation.

Bertrand Martel: Yeah, speed is at the core of the process, but also personalization is making a great customer experience, and the CPQ solution is helping you on that front as well. Any feedback we could share as well, Iris?

Iris Van Goethem: Yes, the Configure price quote with the customization of quotes, I can say the sky is the limit here, and we have played a lot around with it. And obviously the more data you are building over the years, yeah, the more sophistication you can bring into this customization. So what I like a lot also in here on our internal sales side is that we leave room for our sales professionals to still be able to adjust their offers, of course, within a playing field. Yeah, but with that, you don't lose their own knowledge and expertise within their field. You set the guidance, you leave room also for play and you use a lot of data to customize the offers. And what is customization not only on a product level or a commodity level or even on a customer level customized quote. But we have also find that there are a lot of other ways to make additional revenues by marketing the services you have or additional creating the additional revenues that you didn't have the visibility on prior to this. So the customization is a great thing with the CPQ.

Bertrand Martel: PROS Guidance is also supporting you in harnessing the data to enhance the pricing decision. What's your experience around that?

Iris Van Goethem: So you have the customization on one end of the CPQ and then the PROS Guidance itself. We call, well we call data is the new gold. The more data you have, the more you can, you can dig if you want, and the more you can provide our internal people, pricing managers, route managers, the ones who are really sitting on the steering wheel of the decisions daily. They become the miners through the data that you are able to provide them. Now you can say, yeah, but that exists already for a long time. Indeed, it does. Other industries are far way more advanced than the air cargo industry is or was. But they are catching up very fast. The air cargo industry. So with the PROS Guidance, we are now making a more customized offers. It's not just one size fits all anymore, you deliver a price and the price could have been valid within the next day or even the next 10 days in the old ways of working. Yeah, you deliver a price for a customer, for O&D, for a commodity, for a product, for the services, and the price might change already in the next minute or for the next customer. That's how sophisticated it has gotten with PROS Guidance.

Bertrand Martel: That's great. Let's now talk about the future. What's on the digital road map for Cargolux that you can share?

Iris Van Goethem: Well, we have a lot of plans. I can share to share you what we internally do with our teams here. We, of course, continue to build on what we already have because that is a never ending story. As I said before, launching is not finishing it’s starting. Yeah, we still have a lot of work to do on fine tuning internal processes and changing certain processes within certain areas in the world. Yeah, cultures are different level of changes, different, of course they are, too. So we have a lot of fine tuning to do. We still have on our roadmap for our project leap, that was our project name when we started, you know, our partnership with PROS in four phases. We still have two phases of them left. The biggest two ones are done and the last two ones are really geared on creating the data, the customization, and the further automation for our internal decision making.

Mathieu Weber: And then externally speaking, we essentially have our strategy based on three elements. First of all, we want to establish connectivity directly with borders to an API connection. Secondly, we then want to make the same sort of information available, as well as additional modules, which you cannot really squeeze into an API. We put that into a portal. So for those who do not have the necessary the capability to sort of build their own API, they can then connect to us via the cargolux.com portal and make bookings there. And thirdly, we essentially we look at connecting to platforms, which essentially allows us to basically scope out the rest of the market in terms of having our product out there and being bookable. So that's externally facing the three main digital sort of channels that we're pushing. In parallel, we're doing internally, then whole transformation, which then of course, involves the change management that has already done. On the Revenue Management side, but logically, if you change revenue management, then you also eventually have to change somewhat how you do sales. So we have a whole transformation there going on in parallel.

Bertrand Martel: Thanks, Matthieu. And what are the things outside the air cargo, perhaps from a wider transport and logistics industry that you are also influence on the future of the cargo?

Mathieu Weber: I think for us, the single biggest topic outside industry, but at the same time inside the industry is around sustainability. Cargolux has developed a sort of a very strong corporate social responsibility program, which ranges from sustainable fuels or safe to being engaged socially. So those are the immediate sort of industry like implications. If you really look out and you look at the macro themes, it's things like globalization and regionalization. Also things like urbanization changes in customer behavior, which drives, of course, how people purchase. And last but not least, industry 4.0 trends in terms of how technology there sort of is making evolutions possible. Obviously, that has sort of also exciting long term potential for us and the industry at large.

Bertrand Martel: Thanks, both Iris and Mathieu. I would like to thank you very much for your help on behalf of the whole organization and being such a great customer. That's all. Thank you, everyone, for your attention, and I wish you all a great Outperform to anyone. Bye bye, everyone.

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