IAG Cargo: Focusing on the customer
25 / 09 / 2017
The air cargo industry can often be seen as presenting a bit of a conundrum – how do you make money in a market where the supply and demand fundamentals are heavily influenced by another sector entirely; the bellyhold capacity brought to the market by the passenger business.
IAG Cargo’s new chief executive, Lynne Embleton, is the latest head of cargo to face up to this conundrum but she is no stranger to problem solving, having completed a degree in mathematics.
She tells Air Cargo News that it was this degree that first brought her into aviation: “I started my British Airways life in operational research, which is maths applied to business problems − I had to do something with my maths degree and I didn’t fancy being an accountant.”
Embleton’s most recent role was British Airways managing director at Gatwick Airport, where she oversaw the airline’s move to the airport’s South Terminal.
Prior to her Gatwick role, Embleton headed up strategy at British Airways. While she comes from a non-cargo background, freight operations did play a part in the strategic role.
She says: “I had a distant appreciation of cargo from that perspective because as I am making route decisions, then key lanes and cargo demand would influence how I felt about where we put capacity.
“So I had some appreciation − people in cargo would be asking for more here and less there and that would form part of the process when I was looking at strategy for BA.”
Embleton adds that much of her previous experience can be applied to cargo and says she has not “felt it a jolt” moving across.
“I see parallels everywhere,” she explains. “For instance, the 24/7 operation is really at the heart of it, making sure we are reliable and deliver for customers.
“There is also the same customer service focus, albeit at Gatwick it was a consumer focus and this is much more of business-to-business focus, but the principles are still there.”
Embleton says that while both passenger and cargo have a service focus, there is an even greater need on the cargo side because of how much it matters to the forwarder customers.
Embleton spent the first five months of her tenure getting to know staff, the IAG Cargo hubs at Heathrow, Dublin and Madrid, whilst also meeting customers.
“The thing that struck me first was what an amazing and dynamic business we are in and what a worthwhile business we are in,” she says.
“When you look at what is in the box, you have everything; fish, fashion, pharma, fidget spinners − it’s amazing.
“When you think about what a job we do for everybody, in terms of getting all of life’s essentials to where they are needed, it really feels quite worthwhile and that is probably something that from the outside I hadn’t appreciated as much.
“I actually feel quite proud of what we do as a contribution to the whole global economy and to people’s everyday lives.
“The dynamic nature of the business means you feel plugged in to the global economy and how much it changes. We are having a great spell at the moment with Asia, but I am not sure anybody would have forecast that at the beginning of the year.”
Looking at the challenge of remaining profitable despite overcapacity, Embleton says IAG Cargo will focus on customer service, its premium products and digital processes.
Embleton says that she would like to encourage a “customer-centric view” within the business.
“Having spent time talking to our customers and understanding what is in the box, what really matters is us delivering for them and I want IAG Cargo to be chosen because we are reliable and offer great customer service. That is an area we can get even better at and put even more focus on.”
Part of this improvement is linked to digital investment, but also the softer side of the business: “The more you know about what it is we do and how important what we do is, it encourages everybody to be on top on their game, to be as reliable as they possibly can be, that we respond to customers quickly and we resolve any issues quickly.
“So some of it is cultural, some of it is training and some of it is making information available. This is where digital can help.
“I am really optimistic there is a lot we can do in this space.”
Over recent months other airlines have moved to introduce customer focused management roles and new sections of the business focusing on the customer.
For example, Delta Cargo has appointed Vishal Bhatnagar to the new role of director of the US carrier’s recently created Cargo Control Center, added to improve visibility for customers.
Meanwhile, Swiss WorldCargo has implemented a re-organisation of its structure, introducing three pillars; business development, area and contribution management, and quality services. The latter of the three looks after the customer facing side of the business.
Embleton says she is also currently examining IAG Cargo’s setup and could recruit from outside the industry to provide a different perspective.
“I am looking at the structure we have today and whether that is aligned with the priorities we have in the business and no doubt there will be some tweaks to that structure.
“We are bringing in new talent as well and that is something that I am very keen to do.“We have some real deep knowledge, real experts and really caring people in the business.
“I would like to bring in some talent from outside, from other industries to bring some other perspectives.”
On the digital side of the business, Embleton shares predecessor Drew Crawley’s belief that the amount of paperwork within the industry needs to be reduced to help create efficiencies, improve the customer experience and enhance shipment visibility.
IAG Cargo has been making investments to try and improve its digital offering.
In February, the airline group revealed that it would launch a new website and booking portal and also invest in a new warehouse management system.
The new website features application programming interfaces (APIs) that allow customers to interact with IAG Cargo by linking their technology with that of the airline.
“Drew was banging the drum of digitalisation and I think he was absolutely right to be doing so,” says Embleton.
“There is a phenomenal amount of paperwork generated by this business, like all air cargo carriers, and I think it is in sore need of modernisation.
“We are working internally on proper end-to-end e-freight. We will need customers to work with us and I am sure IATA has a role to play as well in this space.
“From that perspective I look at what Drew did in his 15 months here and he was really focused on digital and rightly so.
“We are looking internally at what technology we need in order to really get behind e-freight. It is not just e-AWB, it is the other documentation that goes with it and how we can make this a seamless and modern operation.”
Embleton adds that there will be other investments in technology. For example, the airline is currently trialling scanners that will calculate the dimensions of freight to improve aircraft planning.
The carrier is also looking at tracking devices that can be used to enhance supply chain visibility.
Possibly the biggest project of Embleton’s early tenure is the development of an expanded facility for premium freight.
The centre, which will be called New Premia, comes at a cost of £55m and will double the size of the existing 10-year-old Premia building.
Work on the facility is underway and the “hoardings are up”, says Embleton. The facility is due to open next year and while an exact date isn’t available, it is hoped the facility will be up and running ahead of next year’s peak season to try and avoid opening it during a busy period.
New Premia will offer a larger dedicated constant climate centre for pharmaceuticals, 11 truck docks, with four reserved for the constant climate centre, an additional 20 workstations for break and build, express storage and the whole facility will be temperature controlled between 15 and 25 degrees Celsius.
Meanwhile, the constant climate centre included in the building will feature airlocked areas with controlled temperatures of two to eight degrees Celsius and 15 to 25 degrees Celsius.
The facility is part of the wider focus on premium products − the airline group last year launched a new time-critical product, called Critical.
This year, Critical was expanded to include pharma shipments.
“We will continue to focus on premium,” says Embleton. “The investment we have made in premium over the years, I fully expect to continue to support.
“It has been a growing part of global airfreight and I think we have always been strong in this space“[New Premia] gives us much more capacity for premium products, but it also gives us a more modern warehouse management system and the ability to handle constant climate loose, for example.
“It is another stage in what we have always seen in IAG Cargo as being a real priority area for investment and we will continue to do that.”
Changes at the top
When Embleton took up the chief executive role, she became the third person over the last two years to take charge of the cargo business.
However, she does not feel the turnover of chief executives presents any challenges around continuity for customers: “The great thing about IAG is that there is management talent around the group and we have got that depth of talent to be able to move people around.
“Drew went to Avios [the airline group’s loyalty programme] where we had a need for him and it was great timing for me to make the next move after Gatwick.
“I would like to think customers will judge us by what they see from IAG Cargo as we develop products and ensure we are top of our game in terms of customer service and reliability of products.”
It seems then that Embleton has a busy period ahead of her, with the peak season approaching – expected to be a hectic one − and a major new hub development to oversee.
But while the challenges of managing overcapacity and the slow progress of digitalisation remain, who better to solve the conundrum that is air cargo than someone with a degree in mathematics.