Lars Syberg: Cargolux, airfreight’s flexible friend
14 / 11 / 2016
Lars Syberg, a former freight forwarder and pharma shipper, has made a further shift within the supply chain as the new executive vice president of global logistics at Cargolux, the European all-freighter carrier.
Danish-born Syberg, who has an MBA, also worked for Flying Tiger, not the famous and now defunct US-based cargo airline, but a Scandinavian furniture company similar to IKEA.
Cargolux said on his appointment: “Owing to the strategic and financial importance of integrated door-to-door services for the air cargo industry and Cargolux in particular, the company has elevated Syberg’s position to executive committee level.”
In his new role, Syberg intends to use his 25 years of supply chain experience – he calls himself a logistics geek – to make sure that Cargolux can respond quickly to the changing demands of global shippers.
“You name it, we fly it. That requires flexibility if you have to fly to an exotic place and don’t yet offer it on the product shelf. If it is not an A to B, Hong Kong to Frankfurt five times a day service, then we have to move with the dynamic shippers.
“We can dip our toes into different areas where we would be the first movers, and see whether we can get some [volume] commitments to make it feasible from a financial perspective.
“But it is all about understanding the customer’s customer and by that I mean the freight forwarder and the shipper. And we’re working on that.
”But is that not an enterprise fraught with historic tensions, an airline talking directly to the shipper?
“We will only do this hand-in-hand with the freight forwarders, to get closer to the shipper and add value to their customers through a three party discussion.”
As a former freight forwarder with Samson Transport, DFDS and then DSV, Syberg observes: “Yes I come from that part of the industry. I think there could be joint upside. When I was a shipper the things that really brought value were when freight forwarders understood where I was going in terms of network: reducing the number of warehouses, increasing speed to market, wanting to produce in one place for a global market, and changing my route to market all the time.
“I would very much like to join with the freight forwarder in how we can help develop the shipper’s supply chain. If shippers want to optimise their supply chains then they need an infrastructure that works. In order to have an infrastructure that works, the first step would be to understand where you’re going and the next step would be that we [both the airlines and forwarders] have some kind of commitment.”
He cites the example of a shipper shifting company production to Bangladesh: “We need a commitment from the shipper and we should also make sure that there is sufficient infrastructure to support a global market if that is required.”
When interviewed, Syberg had just three months experience under his belt at Cargolux, at which point he had not met many freight forwarders but intended to do so.
As a shipper, how many times did Syberg meet with an airline?
“I had a handful of third party negotiations with airlines and seafreight carriers, together with the freight forwarder, because they add value to this equation as well.”
Deep sea container lines traditionally try to exclude the freight forwarder as much as possible whereas the airlines are wary of such an intrusion. One European carrier tried it in the 1990s and got a bloody nose.
Says Syberg: “I don’t disagree [with that analysis], and it is not about me changing the sales channel. The only vision I have is that we add as much value to shippers as possible, and how do we do that is by understanding the customer.
“We are in a world where product life cycles are being reduced and that the expression long term strategy is not really used any more. In my time as a shipper we were looking for structures that were flexible in a market that has been so volatile for the last ten years.
“Industry is looking for shorter lead times, small and more rapid deliveries and less obsolescence, to be quick to market and more flexible. You need to make sure that your logistics infrastructure provider understands that.”
Syberg is looking closely at the efficiencies of the Cargolux network, both in the air and on the ground, to see where future efficiencies can be realised. One of those is very close to home.
“In Luxembourg we have a unique position, with a great trucking network that is flexible and unique in terms of frequency, departures and reach, but it may not be the fastest and the most cost effective setup. Maybe we can utilise the volume here and do it more efficiently.”
That could mean extending the bespoke road feeder service concept to other parts of the world.
“We could also, for example, have a global strategy with a ground handler partner that will make sure that we are always in areas where customers want us to be.”
He cites the perishables sector and flowers in particular, where Cargolux has an existing product: “A number of freight forwarders have invested in serving the perishables market, and I need to provide our sales team with a service that will support the seasonality of that product.”
Does that mean additional products in the future? “I would think so. The theory books say that you are either a differentiator or a cost leader. Having been with the company for a few months, I think we have to gain margins by being the differentiator.
“We put great emphasis on being flexible, although flexibility is not always cost effective, so we need to add value by bringing products and competence in specific areas.
“I leave that to the product management team.”
Cargolux has a variety of hub models in different parts of the world. The Luxembourg hub is large and fed by smaller hubs across Europe. The carrier is developing a main hub in China and a multiple hub network prevails in the US.
“So what is the future strategy of these hubs? They all, especially China, remain a strategic part of our network although some may require further development.
“I know that we create complexity when we have a lot of hubs and it is my role to serve those hubs to the best of our ability.”
Which of his roles as a shipper, freight forwarder and now as an airline person has been the most fun? The airline business… of course.
“It is a fantastic challenge to sit and say yes to an investment of $200m in a world that is so full of volatility and to make sure that you find a sustainable business model.”
The air cargo industry suffers from low margins.
Shippers beat up forwarders on price, who in turn beat up airlines. How does it feel to be the industry punch bag?
“We are all a product of price, so if shippers pressurise forwarders it is inevitable that the forwarder in return would put this to the airlines. This is the dilemma many airlines are currently confronted with.
“So we create natural behaviour. But we will have to make sure that we create value because we will never compete on price alone.”
He continues: “That is why I am so confident in selling my vision that we need to differentiate and to add value. If you ask my old partners in freight forwarding when I was a shipper, they would say that this guy was very much into partnership, a very abstract word that has been misused.
“But you cannot be half pregnant. So I believe in long term partnerships and we have some very fine partnerships with freight forwarders today, but that does not mean that we don’t want to increase my margin by adding more value.”