Mr. Forson, as President and CEO of Cargolux since 2016, what key milestones have defined your journey so far, and how have they shaped the company’s position in the airfreight industry? How do you see the airfreight landscape evolving over the past decade?
I am privileged to lead an extraordinary organization in an industry where there are no dull moments and numerous challenges, but if I had to choose a few defining moments, these would be:
- Keeping the airline fully operational during the Covid period as we had to deal with ensuring operations continued at an historically high level, notwithstanding all the restrictions that were introduced not only in Luxembourg, but with neighboring countries and at the international level. I believe that the performance of the airline over this period really brought into light the value of Cargolux as we flew in significant amounts of urgently required Personal Protection Equipment, not only for Luxembourg but for other European countries as well. In addition, we were also doing flights to the USA carrying PPE. I pay tribute to all of our employees who worked from home and especially those onsite who had to ensure operations were maintained at extremely high levels. Our pilots were also especially impacted by being confined to their hotels at most destinations in the network that we flew during this period.
- The re-insourcing of our complete IT operations in 2019, as this is one of the most strategic units for any business – with the rapid advancements taking place in respect of available technology and its application – to significantly enhance productivity and customer satisfaction.
- This has enabled us to renew key pillar systems in the organization, including significant investments in cybersecurity, as more and more data is digitized and digitalization of processes increases.
- The acquisition of LuxairCargo from the Luxair Group. This also represents a strategic move for Cargolux as it is essential that the airline manages its own main hub of operations. This will also enable us to make investments into equipment, systems and maintenance of infrastructure to ensure that we remain competitive with other major cargo hubs in Europe.
- The formation of an aerial firefighting unit – Aquarius AFF – in 2023 which became operational in 2024 with its first deployment in Spain. This is of specific importance to myself as we can see the devastating impact of wildfires on lives and homes. This project is ongoing and we will take delivery of 4 additional aircraft this year, with two of them arriving in February.
Thanks to our agility and flexibility in meeting customer requests whilst providing service excellence, Cargolux is currently the 7th biggest dedicated scheduled service cargo carrier in the world operating a fleet of 30 aircraft.
As regards the future, there is currently uncertainty due to the emergence of e-commerce as a major volume contributor, but the question is ‘is it here to stay’ or will it disappear as receiving countries take measures to stem these flows. Certain South East Asian countries, e.g. Vietnam and Indonesia, have suspended the download of the Temu app in their countries unless certain conditions are met. We obviously also closely monitor the current geopolitical tensions and the risk of trade barriers impacting global trade flows, as demonstrated by the recent actions of the Trump administration.
In recent years, international conflicts and shifting geopolitical dynamics have created new challenges and opportunities in global trade. How have these developments impacted the airfreight industry, and how has Cargolux adapted its strategies to navigate these changes?
As geopolitical tensions increase, the continuous trade/product embargoes to certain countries as well as the closure of Russian airspace to EU carriers – which has resulted in longer flying times to get to our destinations in Asia – have undoubtedly impacted the industry. Cargolux is no exception to this. Sanctions and embargoes on certain products for certain countries have also increased the cost of ensuring that the goods we transport are not in contravention of such regulations.
As regards Cargolux, we are continuously optimizing our network as well as capacity to deal with such situations. Diversification is also important so that we reduce dependency on any one single revenue stream. It is in the very nature of our industry to constantly adapt to global developments. Hence, we place a strong focus on agility and flexibility, which are key to successfully navigating these challenges.
The European Union has introduced numerous sustainability regulations affecting international trade relations, such as CSRD, CS3D, … What do these regulations mean for an internationally operating player like Cargolux, and how do you balance compliance with maintaining global competitiveness?
I do not think that the EU have realized the monster that they have created with these directives and the additional burden that they have placed on businesses in meeting their requirements. Without doubt, this will add additional cost to operating any business of size in the EU. Cargolux competes in an international environment where many of our non-EU competitors do not have such obligations placed on them. The additional manpower and time that businesses now need to deploy on producing such obligations should not be underestimated.
I think that the realization of this ‘monster’ is coming home to roost as various countries and business associations are lobbying for the postponement of the adoption of some of these regulations and challenging its content.
Businesses need to adopt more sustainable practices wherever they can, and Cargolux is committed to taking its part, but if such EU mandates are unrealistic or impractical to implement and result in financial distress of companies trying to achieve what the EU has made law, then there will be more serious problems that will arise because of these regulations.
In my view, these regulations have been put together without careful consideration nor understanding of their impact – including economically – on running a sustainable business.
Starting in 2025, aircraft operating at EU airports will be required to use 2% Sustainable Aviation Fuel (SAF), increasing to 5% by 2030 and 70% by 2050. How is Cargolux preparing to meet these targets, and how do you expect them to impact the competitiveness of Cargolux’ European air cargo operations, including Luxembourg’s?
Cargolux has to purchase fuel with these percentage of SAF as it is the law, but ultimately the consumer will pick up the cost as it will not be possible for airlines, or any other players in the logistics chain, to absorb these additional costs if they are to remain economically sustainable. These costs will inevitably increase as the level of mandatory SAF percentage increases every 5 years.
The other issue is that Luxembourg is not a major airport, compared to Amsterdam or Frankfurt, so we are likely to pay a premium for the mandated SAF compared to airlines operating out of those airports where a broader range of providers is available.
With Luxcargo Handling S.A. taking over Luxair’s cargo handling operations at Luxembourg Airport, what strategic advantages do you anticipate for Cargolux in terms of operational efficiency, customer service, and long-term growth in the competitive air cargo sector?
As mentioned earlier, this was a strategic initiative by Cargolux to maintain Luxembourg’s competitiveness as a cargo hub. This will entail significant investment in systems, equipment, and infrastructure. The integration of Luxcargo Handling provides significant advantages such as improved operational efficiency, enhanced customer service, streamlined processes, and supports long-term growth in an extremely competitive air cargo sector.
In 2022, Cargolux received the FEDIL Innovation Award for its digital project « Dynamic Pricing and Digital Sales. » Since then, have there been other notable digital initiatives undertaken by Cargolux? Additionally, how is artificial intelligence shaping your operations, from optimizing logistics and pricing strategies to enhancing customer experience? What potential do you see for AI and digitalization in driving innovation and efficiency in the airfreight industry?
AI has become a buzzword with multiple seminars and consulting companies offering their services to ‘assist’ companies in developing their AI strategy.
I believe that if a business wants to utilize AI properly and efficiently, it must have a detailed knowledge what its current systems can deliver and how one can effectively bring in AI to improve backend processes, interactions with customers, employees, suppliers and most importantly, what are the vulnerabilities and ethics behind the AI functionalities that are introduced. Unless the AI experience mimics the human touch and provides the information required in a manner which is acceptable to the user, any implementation will be a failure. On a personal note, I find it very frustrating having to deal with ‘chatbots’ on company customer service websites!
As a FEDIL member, Cargolux actively participates in the HelloFuture initiative, promoting technical and scientific careers among young people, with your HR department engaging directly with secondary school students. Is recruitment a particular challenge in the airfreight sector? Does Luxembourg still possess the necessary strengths to serve as the base for a leading international company like Cargolux? From your international perspective, what measures can be taken to preserve and enhance these advantages in the future?
Recruitment in the airfreight sector is particularly challenging due to the specific skills required and the 24/7/365 nature of our operations, which obviously impacts work-life balance. While Luxembourg is Cargolux’ main hub, it is becoming increasingly challenging to recruit the talent we need. Many skilled workers are not prepared to move to Luxembourg because of the high cost of living, especially housing. The provision of affordable housing has unfortunately not materialized and the focus appears to be people buying up houses for speculating rather than individuals working in the country having the opportunity to own their own home.
I believe that Luxembourg should follow the priorities that the late Lee Kuan Yew, ex-Prime Minister of Singapore and its founding father, made when Singapore was established; 1) provide housing for everyone to give them a sense of belonging and 2) strive to give everyone the best education possible. One only needs to look at where Singapore stands today in terms of economic success.
As regards whether Luxembourg will continue to have the necessary strength to serve as a base for leading international companies, regrettably, I would answer ‘not at this stage’. There is a need for a vision and ambition to develop key areas other than the financial sector – which will face challenges of its own.
In this context, we must continue investing in education, fostering innovation, and promoting the airfreight industry as an attractive career path. It is essential for individuals seeking to develop a career with us to have a passion for aviation, as this is not just a random job in a random industry. By taking decisive action to address the obstacles mentioned above, I remain convinced that Luxembourg has the capacity to continue being a key player in the cargo industry landscape and beyond.