As air cargo markets continue to feel the tremors of fluctuating geopolitical priorities and tariff regimes, the ripple effects are fundamentally redrawing supply chains. For carriers, this means reevaluating long-standing strategies and rapidly adapting to volatile conditions.
“Supply chains need a certain predictability. They need to have a certain amount of stability. And to a certain extent, this has been the norm for a long time,” Anand Kulkarni, Head of Global Markets at Lufthansa Cargo, explains. “However, what we have been seeing already during… the first Trump administration, is there were already some … imposed on China along with some other countries. So a lot of companies already started thinking about the China plus one approach.”
That “plus one” increasingly includes Vietnam, India, Thailand, and even Indonesia and Malaysia. “We are seeing Vietnam, India, Thailand, and also Indonesia and Malaysia … when it comes to the different production bases,” he adds.
Lufthansa Cargo has adopted a balanced approach to manage this volatility, relying on both the belly capacity of passenger aircraft and its own freighter fleet. “Roughly half of our capacity is provided by the belly capacities of Lufthansa Group’s passenger aircraft,” says Kulkarni. The other half consists of freighters—18 Boeing 777s and four A321 freighters, with additional 7 Boeing 777-8s on order.
Kulkarni explains how their network design aims to balance stability with flexibility. “We make sure that our networks are stable enough yet adaptable, flexible and agile enough to be able to respond to these situations.” While newer Asian eCommerce players have rapidly emerged, chartering capacity to meet growing global e-commerce appetite, Lufthansa Cargo has taken a measured approach: “We did not wholesale change our network, because we also like to provide a certain stability and reliability to our customers.
Selectively expanding into regions like Shenzhen and Zhengzhou—two stations opened last year—was part of a broader strategy to better serve the booming e-commerce sector.
Coupled with our dense network, we are also well-placed to meet the requirements of the eCommerce sector by leveraging the expertise of our specialised subsidiaries heyworld and Customs Broker.”
Evolving route economics
While shifting manufacturing locations offer new opportunities, the geopolitical landscape presents its own hurdles—particularly with the continued closure of Russian airspace. This significantly impacts route profitability and operational logistics, especially to northern Asia.
Kulkarni explains that the implications go far beyond just increased fuel costs: “Depending on the route, you may need additional crew… and by carrying additional fuel, you also take a payload hit on the plane.” Lufthansa Cargo has adapted by rerouting freighters and optimizing tech stops. “A lot of our routings have been to the southern part of China… relatively less impacted by the airspace diversion.”
In a market where decisions are increasingly being made on a route-by-route basis, Lufthansa Cargo continues to analyse the balance between profitability, reliability, and access. “Cargo plays a certain role… but the main decision makers for passenger flight routings are on the passenger side of the airlines,” he acknowledges, illustrating the layered complexity behind each cargo routing.
Rising importance post-pandemic
One of the strongest post-pandemic cargo sectors has been pharmaceuticals. “Lufthansa Cargo has been a leader and a pioneer when it comes to a lot of temperature controlled and pharmaceutical developments over the last several years,” says Kulkarni.
The airline recently upgraded its pharmaceutical service suite with four major enhancements: a 24/7 control center for transit shipments, advanced thermal covers, smart ULDs with real-time temperature monitoring, and priority shipping options. “These are our recent upgrades for the pharmaceutical industry on the passive- and the active- product side,” he explains.
The cargo operator has seen evolving customer behavior in this segment. “Some of them advanced their shipments, anticipating that there will be tariffs coming later, and some of them kind of delayed the shipments,” Kulkarni observes. Post-pandemic, the nature of pharmaceutical shipments has matured from urgent point-to-point deliveries to a more consistent, diversified global footprint.
“India contributes about 50 percent of the generics that are sold in the US,” he adds. “We have a strong demand for pharmaceutical products out of India into the US.” Additionally, high-value niche pharmaceuticals from the Nordics and Italy are on the rise, as are pharma-heavy routes such as the Brussels to Chicago Boeing 777 freighter service offered by Lufthansa Cargo. “We have seen strong success with that.
