AF-KLM-Martinair Cargo targets express market with new hub

AF-KLM-Martinair Cargo has opened its €22m Hub Express at Paris-Charles de Gaulle (CDG) airport that expects to ride the higher-yield e-commerce parcels wave from Asia to consumers worldwide.
The eight-line sortation hub on a 7,600 sq m footprint is located just ten minutes from the bellyholds of the carrier’s 450 passenger flights that fan out daily from CDG across Europe and the rest of the globe.
It can handle 6,000 parcels an hour at peak demand, but is currently handling around 10,000 units a day, so there is significant room for further growth. AF-KLM handled some 2.5m parcels in 2014 and is forecasting a five percent increase in 2015.
Béatrice Delpuech, market manager France at AF-KLM-Martinair Cargo, says that the building of the new hub reflects the growing demand for e-commerce shipments around the world: “We want to be in the Asian and North American markets and we needed a very strong express hub, close to the aircraft, because if you are further away then the transit will be longer.”
Jérôme Balbi, managing director of Sodexi, 65% owned by Air France-KLM and 35% by French post office GeoPost, says: “We want to compete against Frankfurt and London for express transit shipments in Europe, but we could add also Dubai and probably later Istanbul, to that list.
“We know that we have strong competitors running in front of us and the goal is to save time on the ground. If we take six hours to transit a shipment from one aircraft to the other, that six hours is the time in which you can fly to Dubai.”
The 20-year-old express hub that Le Hub Express replaces is located some 45 minutes away in the airport’s cargo village. The old hub will be stripped of its outdated parcel-sorting equipment but will retain an import role as a base for the Franco-Dutch carrier’s “supermarket” for express freight options with larger customers.
The Hub Express investment is being shared in three equal parts. Sodexi will pay one third, while the banks and GeoPost will find the other two thirds. As part of the complex investment deal, GeoPost is upping its equity in Sodexi from 25% to 35%.
But the new hub is not meant as a direct challenge to the integrators: FedEx, UPS and DHL, all of whom are important customers of AF-KLM-Martinair Cargo, says Delpuech: “The idea is to continue to work very intensively with the integrators who, although they have their own aircraft, still require commercial carriers for transit business to certain destinations, so we need to have a very dedicated tool for them.
“For example if there is an arrival from India at 6am that needs to catch a 7.30am flight leaving CDG for Europe.  That is 90 minutes and when you are 45 minutes from a flight it is not very feasible. That is why this hub has been built.”
In addition to the integrators and the postal authority partners of GeoPost, the global network of courier companies and freight forwarders are also important customers of AF-KLM.
Adds Delpuech: “We have a huge network and that is the reason why we want to work with them.”
Balbi adds that the proximity to the aircraft stands means not just a time saving but also a reduction in fuel and vehicles, saying that looming environmental  taxes for  transport will get higher and higher, “and if you consume a lot of fuel to do your basic business, then you are going to be in trouble”.
Asked whether sister hub Schiphol, home base of KLM, would see a similar express parcel investment, Bram Gräber, executive vice president of AF-KLM-Martinair Cargo, says: “Given the shifts at the Schiphol hub between passenger and cargo buildings we will have to reinvest at Schiphol anyway, and what you see today in CDG is an inspiring example.”
Gräber says that the business case for the new express hub at CDG was based on AF-KLM volumes alone, although there are plans for a pilot project for “a more intense interlining of packages” from the group’s Skyteam alliance members.
 “We have quite an active sky team cargo group and a line of product definition that includes express and we plan later this year to start piloting a more intense interlining of packages because the real added value is in connecting the network points that you don’t serve yourself; that is the essence.”
But Gräber concedes that there will be some complex technical issues to overcome in connecting the cargo systems of the Skyteam partners: “It is not like a code share agreement, and then it is fixed”.
He adds: “So when we pilot, we will also use Skyteam technology, Skylink, which is the general infrastructure between the airlines.  We will see if we can make that work.”