RICHARD MALKIN'S AIR CARGO FOCUS

RICHARD MALKIN'S AIR CARGO FOCUS

SERGIO V. PERSICO, born in Asmara, Ethiopia, has a degree in sociology from the Universityof Rome. Like many of his industry peers who have made startling career changes, however, he popped up in Alitalia Cargo 20 years ago and has been there ever since. There were seven prior years as a naval officer, but that experience apparently did not affect the development of a philosophy that air cargo is "a way of life."

Alitalia's cargo marketing and sales manager, United Kingdom and Ireland, since 1987 reminisces about his early years in Rome. The average shipper then regarded air cargo as useful in extraordinary situations only. This is no longer true, he says. The growth of the cargo customer's awareness of the economic properties in air distribution has more or less paralleled his own maturation as an air cargo executive.In his Heathrow office, where posters cover the walls and nearly a dozen plane models crowd a table, Mr. Persico defends the cargo agent as indispensable. He dismisses as wishful thinking suggestions that the intermediaries will virtually disappear under the competitive impact of the integrators. He does concede that in this period of change their numbers may be scaled down somewhat.

Discussing the operations of various agents in the United Kingdom, he credits qualities of professionalism to both large and small companies. At one point he interrupts his description of a particular small forwarder's customer-service procedure to remark that "the big guys are not necessarily beautiful." Mr. Persico, of course, is saying that fine feathers do not fine birds make; that excellence derives from the exercise of expertise and not

size alone.

This is not to say that size and proficiency do not coincide. The Italian cargo executive cites the fact that 60 percent of Alitalia's outbound freight is provided by only 10 forwarders. This should be considered in light of the fact that the cargo sales staff here calls on 569 of the country's 673 agent locations, 90 percent of which are in the London area.

Mr. Persico's department is 100 percent agent-oriented. Reportedly no attempt is made to sell the shipper direct. In contrast to the industry environment not too many years earlier, airline/agent business transactions are "more open." Liberalization in the industry has brought much of the deal-making above the table. Closing a sale today is "more complicated, more work involved," but he prefers it this way.

Mr. Persico virtually has yielded all shipments under five kilograms to the integrators. He is convinced, however, that Alitalia can compete effectively with them in the freight market.

"There's no reason why not," he says. "We have to follow the market. The integrators will have a fight on their hands."

Competitive clout would be achieved through "close" alliance with the agent. Asked to define his use of the adjective "close," he visualizes ''integration of operations and technology." He does not rule out the possibility that airlines seeking to add muscle to their door-to-door capabilities may opt to acquire well-run forwarding companies.

Alitalia operates DC-9, MD-80 and Airbus A300 equipment on 14 daily round trips between the United Kingdom and Italy. Alitalia Cargo basks comfortably in perfectly balanced directional flows. The cargo customer has switched emphasis from price to service, Mr. Persico notes. But he cautions against reading too much into this. He explains that rates in the U.K. marketplace have "reached bottom," and because there is no margin for maneuverability on price, the customer shifted his bargaining focus to service.

Because of "very strong shipper resistance," there has been no official rate increase since October 1988. He estimates that rate levels in the United Kingdom are about 15 percent to 20 percent below where they ought to be.

In Mr. Persico's view, Europe's approaching internal market will have little effect on air freight. He supports the European Community objectives, but expresses concern about the potential effect of a changing Eastern Europe.

As the '90s wear on, Mr. Persico fully expects Alitalia to bear down on its development and expansion of dedicated door-to-door operations. It is not beyond the realm of possibility that the airline will set up an intra-European trucking system, "with our own fleet of lorries." And this - who knows? - might even lead to acquisition of a forwarder.