Lufthansa Cargo, the logistics subsidiary of Deutsche Lufthansa Group, has agreed to acquire airport service provider LUG air cargo handling GmbH, as it recognizes that efficient transfer operations are a way to reduce slowdowns on the ground for customers expecting fast freight service.
LUG provides cargo handling and distribution at Frankfurt, Munich and Hamburg airports in Germany. The purchase immediately gives Lufthansa Cargo (XETRA: LHA) more capacity to handle its own shipments, while diversifying its revenue stream with business from other airlines require ground handling services, the company said on Tuesday.
The transaction is subject to regular antitrust and regulatory reviews. LUG will continue to operate as independent company and customers will not experience any change in service.
“In an increasingly volatile market environment, we want to become more flexible, more efficient and more resilient for our customers. That is why we are making targeted investments in our infrastructure in our home market in Germany to set the course to provide an even better offering for our customers and achieve profitable growth,” said Frank Bauer, chief operating officer of Lufthansa Cargo, in a news release.
LUG, which is currently owned by the Dettmer Group, has about 400 employees and manages more than 538,000 square feet of warehouse space.
Terms of the deal were not disclosed.
Lufthansa Cargo is currently the No. 14 carrier in the world, by traffic volume, according to the International Air Transport Association. It operates 12 Boeing 777 freighter aircraft and is able to market capacity on six 777s operated by AeroLogic, a joint venture between Lufthansa and DHL Express, for a total of 18 widebody freighters under its control. It also manages the belly capacity of sister airlines Lufthansa Airlines, Austrian Airlines, Brussels Airlines, Discover Airlines and SunExpress to transport freight.
The airline has sharpened its focus on high-margin industry sectors like pharmaceuticals, semiconductors, automotive, and artificial intelligence. Part of the premium strategy includes modernizing cargo infrastructure on the ground. In addition to the LUG acquisition, the company is building a $682 million, 3.5 million square-foot cargo terminal with high bays for efficient pallet storage and automated transport system that will significantly expand cargo handling capacity and efficiency at its Frankfurt hub.
Lufthansa Cargo’s vertical integration extends to cross-border logistics. The company earlier this year merged heyworld, which focuses on providing expedited cross-border shipping for e-commerce shipments and CB Customs Broker, into a new company called GlobeCross GmbH.
Lufthansa Cargo said the combination creates an integrated platform for e-commerce customers with faster, more predictable and fully compliant service in an increasingly complex trade environment.
Customers benefit from a more integrated setup that provides a single interface, shorter decision trees, reduced delays at borders and faster implementation of customized solutions, the carrier said.
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Write to Eric Kulisch at ekulisch@freightwaves.com.
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