Lufthansa Cargo staged a signing ceremony for its alliance with Singapore Airlines Cargo and SAS Cargo at the end of April, two days after the KLM/Alitalia cargo plans appeared to disintegrate along with their "virtual merger".
There are good reasons to suppose the Lufthansa alliances will succeed where the latter failed. A key point is that the venture has been decided for independent cargo companies and not their passenger parents - Lufthansa Cargo has been fully independent since 1995, and the other two plan to be so within the year.
Lufthansa Cargo showed its independence as long ago as 1997 by picking Singapore Airlines as an Asian cargo partner, instead of Thai, then the only Asian partner in the Star Alliance. Since then the two carriers have been swapping Europe-Asia freight between each other's Boeing 747Fs at Sharjah in the United Arab Emirates.
Co-operation between Lufthansa and SAS on cargo has been energetic: the two are merging their European sales operations and have a joint freighter service to Osaka with Japan Airlines.
The new grouping, provisionally entitled New Global Cargo, therefore has a firmer base to build on than most. It offers global synergies, even without a US partner - Singapore's substantial transpacific operations complements Lufthansa's capacity across the Atlantic. Together the three will reach 60 freighter destinations in 35 countries, and 530 bellyhold destinations.
For the alliance to have a smooth ride, SAS and Singapore Airlines need to keep their promise to turn their cargo departments into standalone operations.
Secondly, integrating handling and IT processes will be tough. The three carriers revealed at the signing that they had tried to harmonise express products last year, but failed. Solving this problem will be expensive and the two-year deadline might prove ambitious.
A more nebulous threat comes from the other alliance Lufthansa announced in April, however - its long-awaited tie-up with Deutsche Post, the German post office that owns two large forwarders, Danzas and AEI.
The deal as announced is short on detail, but potentially radical. It will pool the partners' voting rights in express parcels operator DHL - 25% each - in a new company called Aerologic, the clear aim of which is to control DHL, although for regulatory reasons Lufthansa cannot say so.
Another joint venture company, e-Logic, will look at new e-commerce and supply chain products. Danzas/AEI will also become Lufthansa Cargo's first "system partner", a souped-up version of its global partnership scheme with major forwarders which involves "crossing the line", to create transparent systems and plan joint products.
Even Lufhtansa admits that this adds up to a clear step towards vertical integration: a tenatitive one, because it does not want to lose neutrality in the eyes of other forwarder customers. But in a few years, it envisages perhaps five global cargo systems, of which FedEx and UPS will be two, and Deutsche Post-DHL-Lufthansa another. New Global Cargo is clearly designed to give global scope to this system.
At the signing, it was pointed out that alliances often come apart because one partner becomes too dominant or forward looking and the others cannot keep up. Avoiding that will be a delicate balancing act for Lufthansa Cargo.
Source: Airline Business
