FRENCH-owned global forwarder Geodis Wilson is streamlining its airfreight products as it continues to expand in emerging markets.
The company, managing 200,000 tonnes of belly-hold and main-deck cargo per year, is harmonising its airfreight product range and is piloting the new-look portfolio in India.
Owned by Geodis Group of France – itself a division of French state-owned railway operator SNCF – Geodis Wilson was formed in 2007 when Geodis Overseas merged with Wilson Logistics of Sweden, the latter regaining its historic brand name after a brief spell as TNT Freight Management.
A year later came the acquisition of German logistics provider Rohde & Liesenfeld, then a strategic partner of the Geodis group.
Henk Venema, Geodis Wilson global product director for air, speaking in Shanghai, said: “We are a company of mergers, and a number of legacy airfreight products are still in existence. So, starting in India, we will renew our service portfolio, focusing in the essential basics: there will be three products: one cost driven, one transit time driven and one commodity driven.
“The products will then be rolled out to the world, so that we are again speaking the same language in our product offer.”
He added: “We will focus on the deployment of gateways, physical and virtual, to compensate the carriers’ policy to apply surcharges on chargeable rates, where the consolidators win and the point to point forwarders lose.
“And we will be looking to streamline our pricing processes. We want to act faster and be more agile, in particular to global client opportunities.”
China is a focal point for the Geodis parent group, which first set up shop there in the late 1970s. Geodis, which had its senior board team present in Shanghai for a trade show, is interested in intra-Asia, transpacific and Asia-Europe trade flows.
Venema describes differing scenarios for airfreight growth in Asia: “Asia to Europe is still capacity and market driven, with the stronger players ruling the market.
“There is a substantial intra-Asia air freight business and it remains one of the fastest growing regions. Most customers want a one-day transit time.
“However for some intra-Asia air freight markets, that growth in volumes is outpaced by the increase in capacity, and that is the challenge”
The transpacific trade lanes, Asia to north and south America, are still a market “dominated by bigger players, with all the smaller ones having to rely on brokers to access capacity,” says Venema, adding: “It is a rate-stable market with good peaks, but a tough one to break into.”
Geodis Wilson’s growth strategy until 2018 is focused on Brazil, India, China and US, says Venema, adding that the transpacific remains a key focus for airfreight volume growth.
How will this be achieved? “The simple answer would be to buy market share, but that is not what we want to do. We want to build up a trade, so we will focus on lane management at both ends, acting as competence centres.”
These trade lane managers will have an eye on sea freight too, says Venema: “They will connect with their ocean counterparts so that Geodis Wilson can provide a total solution and not only an air freight or an ocean freight solution.
“We want to see expansion through our global accounts, that are currently active only in one sector. We want to persuade them to use our services in other sectors.”
Asked about specific air cargo target markets, such as pharmaceuticals, Venema holds strong views: “I think that the air cargo industry has succeeded very successfully in commoditizing pharma, and the industry is now back to finding segmentation within it.”
He adds that in the early days of the pharma boom, especially on some outbound markets, the industry went for tonnages alone.
“Because pharma volumes are so stable and always present, both in the good and bad economic times, then the industry would chase volumes to create stability and so risk commoditizing the market.”
The pharma lesson has been learnt and applied to other sectors, says Venema.
“Now you see airlines and freight forwarders actively investing in solutions. Whether it is pharma, oversize cargo or express, carriers are focusing on higher yield products because general cargo will not give them the revenue they need to operate a flight.
“So they start to differentiate, to attract different types of cargo and to spread the risk.”
On the subject of electronic airwaybills, Venema states: “The project has been off to a slow start, mainly because there was very little incentive built-in for the forwarders.
“But, we are heading in the right direction and Geodis Wilson is an active player. We have restricted the e-AWB to preferred carriers only. We will not do it with the world, we will do it only with our preferred carriers.”
Why so selective? “Because there is IT investment that comes with it, plus start up and training costs. To set up an e-AWB for every airline, some with only ten e-AWBs a month, would not justify the investment. It still depends on the location and the connectivity.”
He adds: “Once a carrier is switched on for e-AWBs, it means simplicity for the users.
“Right now the e-AWB is mostly for the benefit of the airline and the handling agent and not so much the freight forwarder, who has already invested a lot of money in cutting away paper from their own supply chain.”
Geodis Wilson will remain dependent on commercial carrier uplift, said Venema: “We will spend time to strengthen further our carrier relationships, and look at partnerships rather than pure transactional buying behavior.
“It is give and take, and sometimes in our industry we do not play the partnership card too well with our carriers and in the end it is not to our benefit if a carrier stops flying to a destination.
“We should think more as an industry rather than as airlines and freight forwarders separately. We have to come up with solutions for our competition, which is not only ocean freight but also the integrators because we are losing like for like share to both.”
He concluded: “The loss of volumes to ocean freight may be partly irreversible but the integrators have found an answer, especially on e-commerce solution, where we as the airline/freight forwarder industry should also come up with answers.”