Sending a small package with an express operator is a fairly simple operation, with clearly defined transit times and readily available pricing. Sending freight by air is usually more cumbersome and opaque, with limited standardization.
Now Kuehne & Nagel is trying to apply express-parcel procedures to its airfreight service, using Cargo 2000 standards as a catalyst. Cargo 2000 is an industry initiative supported by three-dozen international airlines, forwarders and others in the air-cargo supply chain. The initiative was launched in 1996 to establish standard processes to simplify airfreight.
Kuehne & Nagel has developed a set of airfreight services with clearly defined, all-inclusive rates and performance standards based on three speeds of shipment.
The top tier in the new product lineup is KN Express, which usually moves on the first available direct flight and comes with a performance guarantee. If such a shipment is late through the fault of the forwarder or the airline it chooses, Kuehne & Nagel guarantees the shipper's money back. The other two services are KN Expert, a consolidation service that uses select carriers and goes on direct flights where possible, and KN Extend, an economy consolidation service. The services are door-to-door, but clients also can choose an airport-to-airport option.
Marcel Fujike, Kuehne & Nagel's vice president of business development and product management, said customer suggestions helped develop the portfolio. Their top demand was for reliability, followed by pricing and transportation times, he said.
What distinguishes Kuehne & Nagel's new offerings from other forwarders' airfreight-service packages is the matrix of performance measurements derived from Cargo 2000 standards.
Fujike likened the Cargo 2000 element behind Kuehne & Nagel's product portfolio to the "Intel Inside" hardware at the heart of computers equipped with the predominant microprocessor.
Based on the Cargo 2000 process framework, a route map is generated for each shipment. The map allows accurate forecasts of times required for each segment of the transportation chain. Fujike said this meets shippers' growing need for supply-chain planning and control. They can track a shipment online, and receive automatic alerts if a shipment doesn't complete a segment on time.
DHL Danzas Air & Ocean is a Cargo 2000 participant but has no plans to redefine its services using the initiative's framework. However, Gary Schultheis, the company's vice president for airfreight in North America, said Cargo 2000 brings forwarders and shippers better supply-chain visibility. "Cargo 2000 in my mind is just as important as ISO certification," he said. "It eliminates that black hole by providing more visibility and time stamps. Of course, we measure our performance today, but a lot is manual. Wherever it's manual, it's subjective."
Ole Ringheim, senior vice president for global airfreight at Exel Global Logistics, another participant in Cargo 2000, said his company is supporting Cargo 2000 and seeking accreditation in it "because we think it's an important signal. Customers ask more about it than a year or two years ago."
Cargo 2000 participants have been frustrated by the industry's slow acceptance of the initiative. Fujike said it's easier dealing with an airline that participates in Cargo 2000, but he said Kuehne & Nagel can maintain its own standards with nonparticipating carriers. "Wherever we can, we use carriers that are Cargo 2000 members, because the data that we need will come back from them," he said. "Otherwise, we just have to use our own data. Based on the airline's departure and arrival times, we can calculate the cut-off time, and at the destination we know how long the carrier needs to get the documents and the shipment ready."
Kuehne & Nagel planned to introduce its new services in mid-July on eight traffic lanes linking Atlanta, Chicago, Paris, London, Amsterdam, Stuttgart and Nuremburg. Those were the eight lanes where the forwarder first ran Cargo 2000 trials, Fujike said. In October, the service will be extended to cover all links between those eight cities. K&N's entire global network, with approximately 300 stations, is scheduled to use the new services by the end of next year.
The service portfolio applies initially only to general air-cargo shipments. Special cargoes, such as perishables, dangerous goods, valuables and project cargoes, are not included, although Kuehne & Nagel intends to extend the services to these segments. The new services, however, will not be available for all airfreight the company moves. "There will always be some cargo left that can't be covered with standardized products," Fujike said.
He said customer reactions to the new services have been positive. "Customers love the all-in rate. Typically, when they call forwarders to get a quote for a shipment, it takes two or three days for the forwarder to respond with the rate. Now they can get the rate almost immediately," he said.
DHL Danzas has no plans to use Cargo 2000 to redefine its services. "We already have various services, like next flight out, consolidated or value service," Schultheis said. "We regard Cargo 2000 as something that can take the industry forward in terms of visibility and data interface."
But Exel intends to develop services on the basis of Cargo 2000. "One of the ideas behind the initiative was product development and improved customer service. Using product definitions as opposed to just having an airfreight service raises the game. We can sell more effectively, in a more defined way, than today," Ringheim said. "The two products that come to mind where forwarders could do a better job are time-defined and temperature-controlled services."