This year may go down as the one that marked the return of customer service in the air cargo industry. Not that it's been entirely absent in recent years, it's just that price seemed to so often overshadow everything else. And while price is still an important consideration, shippers are quickly realizing that choosing a transportation partner for their ability to provide customer service, and all that that entails, is worth it in the long run.

If for no other reason, being able to secure lift in a time of extremely tight capacity is causing shippers and carriers alike to reevaluate business strategies and relationships.

A big part of the problem has been China, which has caused major equipment balances for carriers, air and ocean. "I believe that for the first time in about 25 years, freight rates are going to increase significantly," says Julian Keeling, president and CEO of Consolidators International, Inc., a major air freight wholesaler. "There's simply no way getting around it, and shippers will have to accept that."

"From a forwarder's point of view, if he's going to be charging more money, he's going to have a better opportunity to increase his margins. The forwarder's going to be more profitable. And if he's sensible, he'll invest in staff and improve customer service." Keeling understands the importance of technology, "but at the end of day nothing beats the old-fashioned voice on the other end of the phone. I think this will be one big differentiating factor in the industry as we go forward."

This emphasis on customer service and the developments it has spawned in the industry is already evident, according to Keeling. "The large forwarders have in recent years expanded their IT capabilities because it reduces the cost of labor, i.e. fewer staff. They've geared themselves to run 'faceless.' However, the small- and mid-sized forwarder sees the world a bit differently. As a wholesaler, I've already have seen mid-sized forwarders grabbing big chunks of business that you would think would be the domain of the large multinationals, all because of personal customer service."

A great example, says Keeling, is General Motors-Holden's. [In 1931, General Motors Australia merged with Holden's to form General Motors-Holden's Ltd.]. "For years, they've used a large multinational forwarder. This is a big piece of business, and it's getting bigger with the U.S.-Australia Free Trade Agreement and the declining U.S. dollar, as Holden's been procuring more and more from GM in the United States."

Recently, however, the large U.S. multinational forwarder that had been handling the account lost it to "a little New York company, Walker International Transportation," explains Keeling.

Meanwhile, Keeling's company is helping to service the Kimberly Clark contract for Australia. Again, another significant piece of business that was previously handled by a major forwarder. "It's personal service and personal attention that will determine the customer's loyalty. He knows he's going to pay more anyway. Therefore, when rates get to say $4000 instead of $1500, if it then goes to $4200, it's not a big issue. It comes down to relationships."

No one knows that better than Bernard Frattini, CEO, U.S. Cargo Sales Joint Venture. The U.S. Cargo Sales Joint Venture, formed by Air France, Delta Air Lines, Korean Air, and newest member Alitalia, are also members of the SkyTeam Cargo alliance.

Relationships have been the key to the JV's success, both internally as the alliance's management philosophy attests, as well as externally, in the way the JV presents a unified front to the customer.

"The JV is a tool in the hands of the alliance, the expression of the strategy of the alliance," Frattini explains. "The U.S. is the only place in the world where we have a JV. We did it here because of the size of the three companies we started with, they were similar in size, and they had a full complementary network-Delta to Europe and Latin America, Korean Air to Asia, and Air France to Middle East and Africa. We also started in the U.S. because it's a melting pot and perhaps more acceptance here for diversity."

The launch of the JV got off to a tough start. "We started just after Sept. 11, 2001, so it was not a good year for us or anyone really. Last year, however, was an exceptional year."

Frattini says the JV's ability to manage people has been key, despite the inherent challenges involved with trying to bring together different corporate environments. Frattini acknowledges, "It's hard to merge three different cultures," but in order to help smooth out the wrinkles, "each airline transferred staff to the JV. It was also a way to retain customers, and it brought expertise into the JV. We also strived to create a balance of power in the JV, and make sure to not have any dominate culture. The result is that people feel more comfortable when they are well represented."

Execution was the second factor Frattini cites for the success of the JV. "We had to have a plan and we knew we couldn't go in a different direction at the beginning. We stuck with the idea even when it was shaky at first."

"Finally, we had to match our strategy with the needs of the customer. We checked with our customers when we started the JV and asked what they expected of us, what they wanted. They told us they wanted one network because in today's world we're dealing with global companies, who are also located in various parts of the world. Therefore, we learned that when we're in front of our customers, we need to sell the world. In addition, we need to offer them a single point of contact and a full range of products that are available from all three airlines. We harmonized our products and we are presenting the same product line to the customer."

Undeniably, the JV can offer one of the most extensive air cargo networks on the planet. "In terms of network, we are an exception in the United States. No other airline can bring what we bring. With Air France, you have the ability to move big shipments, those requiring main deck capacity, to Europe using Paris as a point of entry. From there, you can also connect to Africa. Delta also serves Europe with more than 40 flights a day, and also flies to Latin America. Korean Air, through Incheon, offers more than 50 freighters a week. Together, we have a tremendous amount of capacity and we can offer the world." Frattini adds that connecting service to India and Moscow is also available.

The sales representatives for the JV present a single company, service, and product to the customer, says Frattini, which gives the customer increased leverage.

When asked if there are any real rivals in the industry, he says, "There isn't really anyone quite like ourselves-one company, selling the same products, on multiple airlines."

And as for expanding the JV model to other global markets, Frattini says he's not sure if that would ever happen. "That's because it may not match the internal requirements we have established for ourselves. In other words, we wouldn't want an imbalance in any region, one carrier that was dominant."

Frattini is excited about Alitalia's joining the JV this spring. "They're coming in April. What will they bring to us? A fleet of five MD-11s and a huge presence in an important European market, and that is Italy. Alitalia has expertise in the cargo business because they've always been in the cargo business."

The quest for perfection never ends. And, there are still some areas that Frattini says need to be improved. "We must continue to push for harmonization among the airlines. Right now, we are very good in front of the customer-explaining, selling-but if a problem occurs, we found that we are not as effective as we need to be when it comes to exchanging knowledge between our people."

"To deal with the diversity was a big challenge, but also very rewarding. I've read that diversity will be the engine that will drive the corporation in the 21st century. So, I'm very happy to be at the head of a company like that and proud of what we've achieved."