In an industry where speed matters, air freight has lagged behind B2Cs and other B2Bs in adopting digital technology. However, Lufthansa Cargo is leading the charge to close this gap. With the help of PROS pricing solutions, the carrier is simplifying and accelerating the quoting process with intelligent spot rate distribution on its eCommerce platform. The results are transforming the customer experience and business performance.
Navigating Relentless Pressure
Lufthansa Cargo is one of the world’s leading air freight carriers, providing tailored logistics solutions to customers in more than 100 countries. Using its own fleet of freighters and the belly capacities of passenger aircraft, Lufthansa transports 1.6 million tons of freight annually. Speed is critical. Whether the cargo is medical supplies, heavy machinery parts, or high-demand consumer goods, it must reach its destination on time.
The industry’s booking process can be a freight bottleneck. Each request for available capacity and spot pricing often generates several back-and-forth emails and phone calls, which can add up to thousands every day. In this environment, pricing inconsistency and over-discounting are perennial challenges. Furthermore, without advanced analytic structure around pricing, it is difficult for carriers to gain insight into rate performance to understand outcomes like which quotes won or lost deals and for what reasons.
To better serve its global customer base and tame a complex and high-cost environment, Lufthansa Cargo sought to modernize quoting. The first goal: to make booking air freight transport as easy as booking passenger travel. “We wanted to make it easy for agents to go online and get instant pricing for every bookable route,” says Lars Mueller, Director of Pricing for Lufthansa Cargo. The second goal: to give its pricing team science-based, centralized control for rate optimization and management. “We also wanted to give our teams the innovative tools to drive consistency and efficiency in the way we price,” Mueller adds.
Targeting a High-Cost, Manual Pricing Environment
Lufthansa Cargo turned to PROS for a number of reasons. “With PROS experience and history of helping businesses transform how they engage with their customers, we had confidence that they could provide the solution we needed to expand our digital sales channels,” Mueller says. “We also have a longtime partnership with PROS on the passenger side of the business, so we felt very comfortable with them.”
Launched in December 2019, Lufthansa Cargo’s eCommerce portal, called Rapid Rate Response (RRR), leverages the PROS Commerce Platform for Transportation and Logistics. PROS Real-Time Pricing Engine was chosen for the high performance, scalability, and availability needed to power RRR. Flexibility was also an important factor, enabling Lufthansa to customize the PROS solution with its own scientific algorithm and rationale.
PROS dynamic pricing and analytics software enable price discipline, giving teams the visibility to identify revenue leakage and profitability in ways that are impossible with spreadsheets and human intuition.
"PROS pricing solutions have been transformative for us,” Mueller says. “PROS provided us with the high-performance pricing solutions we needed to successfully launch RRR and provide direct and indirect sales channels with real-time spot quotes. This has enabled us to embrace a digital business model for how we serve our customers while giving our internal teams the vital analytic insight needed to drive yield performance."
In addition to factoring in all the details needed to fly any shipment—dimensions, weight, loadability checks, regulations—rates now fluctuate in real time to reflect changing market dynamics while harmonizing with Lufthansa Cargo’s pricing strategies.
Realizing Transformative Results
Accelerated quoting. With its new eCommerce quoting platform, Lufthansa Cargo has drastically improved and accelerated the quoting process. “Booking 24/7 has never been so easy,” Mueller says. “Clients can go online, enter their details, receive a spot quote, and book transport in a matter of minutes.”
With this easier and faster way of booking online, Lufthansa Cargo has realized a double-digit percentage increase in online sales in a matter of months.
Greater productivity. In addition to modernizing the customer experience, Lufthansa Cargo has also enhanced how the business works internally. “By automating quotes, we’ve been able to transform behind the scenes, reducing the need for ad hoc pricing activity, review, and approval,” Mueller says.
As a result, quoting has gone from several manual emails and phone calls for each spot quote to just one automated email to confirm the booking if the customer did not directly book online. “This frees up time for our team to focus on more strategic work and locate new opportunities,” Mueller adds.
Disciplined rate and rule management. Lufthansa Cargo can eliminate revenue leakage and drive higher yields through more consistent, disciplined rate and rule management and pricing model execution.
The PROS solutions deliver on Lufthansa Cargo’s strategy to:
- Better service new and existing customers with a modern eCommerce experience that is fast and efficient
- Move from static, manual pricing to a real-time pricing strategy based on the actual value of market capacity
- Manage and enforce pricing management policies to drive a consistent strategy in price delivery with error-free control
- Scale the business efficiently through an eCommerce sales channel with significantly lower overhead costs
Building Sustainability in Cargo
In this era of volatile demand where cargo peak season can suddenly shift without warning, agile responsiveness to market conditions is key. With PROS real-time pricing and eCommerce solutions, Lufthansa Cargo is blazing a digital trail both inside and out. Pricing teams now have the analytic tools they need to gain deeper insights about trends in buyer behavior and needs while customers have an accelerated self-serve quoting experience to make freight flow easier.
“PROS is an important partner in our digital transformation,” Mueller says. “With PROS real-time pricing solutions, we’ve revamped how we provide services to customers while giving our internal teams the tools they need to work with greater speed and efficiency.”