Good connections and rapid responses from KLM

In a year of rapidly slumping fortunes for air cargo, Amsterdam Schiphol has fared best of the big European airports. with volumes dropping just 3.N in 2001.
Schiphol’s relative success owes much to the steady performance of Ki M, wh se cargo
— around 600,000 ton nes — accounts for 50% of volumes through the airport.
KLI Cargo volumes for November reached those of the previous year, following drops of 4% and 8% year-on-year in October and September respectively. The figure dropped again to a still-respect able 5’4 deficit in December, because of weak traffic to and from Asia in the last two weeks of the year.
Under the guidance of executive VP Michael Wisbrun, who took over in 1999, the buzzword has been “connectivity”.
Although he relates this to many areas and levels of KLM Cargo’s systems and opera-
tions, the main emphasis is on the connection if h the other two players in the air cargo triangle, forwarders and shippers, and the ability to respond rapidly to their needs, for which KLM Cargo has a reputation.
Six months ago Wishrun began weekly conference calls with his top 2() sales and services managers around the world. Every two months he does the same with his top 120 people.
“In 45 minutes we get through what is going on in the market,” says Wisbrun. "What is the behaviour of the customer? What is the competition doing? How should we behave? Why do we see load fhctors up and down?
“We make decisions where needed, and create a dynamic which helps generate good business, even in difficult periods.
We focus very much on shaping the behaviour of the line management towards getting things done, doing fewer things, setting priorities, making act ion plans and running them smoothly.
“My people are accountable for soft targets as well as sales figures; how they run their processes; whether they run projects on time; and their connectivity to our customers.
“It is not just about rates, but margin management, and how to allocate the capacity to the market. And if there is more
business of a higher rate, we attract that.”
According to Wisbrun, 2001 proved the value of the combiaircraft in the KLM fleet, and the significant role cargo plays in the planning of passenger schedules.
“On the capacit.y side, we made a number of changes, moving capacity from some markets to others. We are flying more combis with more capacity on the cargo side than budgeted for this winter, more or less the same capacity as last year. We changed some of our full pax machines into combis to make it easier for our passenger people to continue on a daily basis to, for example, Los Angeles or San Francisco, filling the aircraft with more cargo. That is why the combi is such a smart vehicle.”
KLM has been increasing its focus on market sectors. Wisbrun believes that the nature of the company’s prod-
uct portfolio, completed last April and including time-definite and specialist products, helps staff focus on particular markets. Reflecting this, sales of specialist products have seen double-digit growth.
Until around two years ago, KLM was selling directly to shippers, and Wisbrun believes this history positions KLM well to read different markets.
“We still have the shipper contacts, and we try to understand the markets they are in. Money is made segment by segment and market by market, It is not a generic issue whether you are a good carrier. You are as good as you are in the segments. It could be geography, industry segments or a route.
“If the market is changing, for example, the hi-tech segment on Taipei/Amsterdam, we adjust. The moment we see more demand we readjust. If the market is good we put up the prices, in co-operation with the forwarders, and they understand.
Another factor in KLM Cargo’s relative success is the reduction in capacity from carriers dropping out of markets.
“Sabena is out, Swissair has been in trouble, United is out of the Amsterdam’Chicago market and Singapore will stop Amsterdam/Chicago,” he says.
One area in which KLM has particularly benefited is the shipment of valuable goods.
“Banks still need a ht of money, diamonds and gold to be shipped around.”
Another of Wishrun’s smart moves has been to link up with spare capitcity in ‘TNT’s European feeder network.
“‘e flew some A300 fr(ighters to connect markets that we could not easily link by truck, for example, the UK, Ireland, Finland. We were only able to offer Manchester or
l)ublin full freighters, but we wanted to lower our costs and become more flexible.
“We now have an arrangement with TNT Express on a pallet basis, We have fewer assets, and they get a contribution to their fixed costs. So we are bringing more specific capacity tuned to the needs of the customer. That has been going fine Since 1 November, and we will listen to the market
and adjust that every quarter.” Wisbrun credits the Schiphol
airport authority and the Dutch government for encouraging manufacturers to develop their European distribution centres around the airport.
“A lot of Japanese companies created their warehouses here.
There is a kind of a momentum from having created the right infrastructure to attract business here.
“Together we have developed the area as n gateway to Europe and from Europe to other destinations. It is a kind of circle that tends to go on and on.”