Over the course of several years, and aided by several IATA certifications, LATAM Cargo has validated and improved its operational processes, leading to streamlined decision-making, increased volumes, and a position as a leader for the air cargo industry. CEO Andrés Bianchi tells their story.
Chief Executive Officer
LATAM Cargo is a subsidiary of LATAM Airlines Group, Latin America’s leading airline group with one of the largest route networks in the world. LATAM Cargo offers air services to around140 destinations in 25 countries and is present in five domestic markets in Latin America: Brazil, Chile, Colombia, Ecuador and Peru. In addition, LATAM Cargo operates internationally in Latin America, Europe, the United States, the Caribbean, Oceania, Asia, and Africa with over 901,000 tons transported in 2022.
Ensure a sustainable organization, in a sustainable industry
The air cargo industry is hard to benchmark, which makes it difficult for organizations to know how to improve in the short term, and where to concentrate their efforts to develop their capabilities over the long term. Yet, we have a responsibility to ensure a sustainable organization: not just one that delivers financial results now, but that prepares for the future.
Back in 2016, our goal was to carve out a place for LATAM Cargo as the air freighter of choice for the transportation of pharmaceutical products. We had identified this industry as playing an essential role for the wellbeing of the world, (four years later, our analysis was proven correct), and we wanted to occupy a premier position in the Americas. To grow our business in this sector, we needed to demonstrate to our customers that we could meet and exceed the stringent standards they required. Preparing for the future also means playing an active part in the sustainability of the entire industry, and we turned our attention to this wider vision in 2021. The LATAM Airlines group had committed to implementing a world-class environmental management system that would enable the entire organization to improve our performance and better control and mitigate our environmental impacts. We, as the cargo subsidiary of the group therefore set our sights on improving our environmental management, building on the ISO 14001 certification we already possessed.
The following year, we wanted to raise the bar for lithium battery shipping in terms of compliance with regulations. As lithium batteries have become ubiquitous, it is extremely important that all industry players, from shippers, through forwarders and every type of transporter, and including regulators and customs, do their part to mitigate the risks. As we were already known for our high standards, we took it on ourselves to collaborate with IATA in order to set an example and help kickstart industry initiatives, encouraging our ecosystem to be part of an industry-wide movement. For all these objectives, certifications from knowledgeable partners with global reach ensure our operational processes and strategic decisions are in line with industry best practices. For us, there was no question of considering any other option but IATA Certification.
A range of globally recognized certifications that reflect industry excellence
In 2016, in order to attain our goal of expanding our pharmaceutical transport business, we started the process of becoming a Center of Excellence for Independent Validators on Pharmaceutical Handling (CEIV Pharma). This globally recognized standard is a guarantee to customers of safety, security, compliance and efficiency for the high value shipment of pharmaceuticals. We started by carrying out an internal assessment in March of that year, and completed our final audit by IATA in January 2017, becoming the first airline in the Americas to be certified. As the certification is valid for a period of three years, we were recertified in March 2020 and, at the time of writing, we were awaiting our second recertification audit, hence having our PHARMA product certified for 6 years.
The process taught us more about preparing information and gave us access to new assessment and control tools, which was a little different than what we initially expected, and helped to improve our Pharma offering. It also taught us how adhering to a strict process adds value for pharmaceuticals customers, who are different from our usual customer base, so that they will trust you more. The final IATA audit verified that our company and our processes, including quality management, personnel training, supplier management, internal auditing and transport, comply with the most stringent international standards for the transportation of pharmaceuticals.
CEIV Lithium Batteries
On the basis of our first, very positive, experience of CEIV, it was an easy decision to become the pilot airline and cargo handling facility for the CEIV Lithium Batteries certification. Safety is the number one guiding principle for the LATAM Airlines group, this certification aligns with that principle and goal.
We really care about the safe transportation of lithium batteries, and the fact that the certification is now applicable to organizations throughout the supply chain really appealed to us. It is clear to us that shipment of lithium batteries and goods containing them will only really be safe if all stakeholders get involved.
We already knew we had a good base in terms of processes, and we expected the certification to prove to us that we were doing the right things. Over the course of the three months it took to become certified IATA validated that our systems and processes meet international standards and regulations, as well as helped us identify some opportunities to optimize performance. This was a very encouraging signal and confirmed we were approaching this issue the right way. Thus we were extremely proud to become the first airline in the world to be certified CEIV Li-batt in September 2022.
At LATAM Cargo we had a lot to learn and put in place in order to obtain the IATA Environmental Assessment (IEnvA) certification, and therefore meet the LATAM Airlines Group commitment to certify all its operations. IEnvA independently evaluates how aviation stakeholders are continuously improving their environmental and sustainability performance. This was a much newer subject for us, but IATA guided us steadily and surely so that we could achieve stage 1 during the fall of 2021. Just looking at the baselines IATA shared with us was very instructive, and it opened our eyes to the complexity of certain aspects of environmental management.
Greater internal alignment and facilitated decision-making, combined with business growth and a position of authority in the industry
With the CEIV Pharma certification, we’ve seen impacts both internally and with customers. Firstly, it has proven a very powerful vehicle to show customers that we meet the standards they expect, and it has opened doors for us with companies that we would not have had access to otherwise. In fact, we have tripled our pharmaceutical business volume since we became certified. This certification also set the base and prepared us for the challenge of transporting the high volumes of COVID-19 vaccine to South America, where to date we have transported more than 575 million doses successfully.
Internally, we have become more exacting and stringent than what we were before. This has happened at every level, largely because our understanding has improved. And this has also been very useful when it comes to decision-making; the need to comply with requirements is known to all those involved in the decision, which then becomes streamlined. The business case is clear, and the decision to invest, for example in updates to cooling equipment, is much quicker.
Although we already had greater control over our process for lithium battery handling, the CEIV Li-batt certification has also given us more alignment internally about what we need to do. It enables us to incorporate changes faster, because our decisions are based on the benchmarks that are built into the certification. Finally, we can make decisions faster, such as on which improvements need to be made and which are superfluous.
Being certified also enables us to speak with greater authority in our conversations with other industry stakeholders, encouraging more action. When we say this is what we have learned, this is what needs to be done, we are no longer being perceived as overzealous, but as having the right approach to address these risks. This is important because we need a strong supply chain. Risk mitigation measures will not work if even one link is weak, allowing regulations to be contravened.
Certification enables the weakest links to start disappearing, because it exposes stakeholders to best practices, and therefore allows the industry as a whole to have better standards. And having a global, industry-wide organization like IATA overseeing these standards makes it faster for companies to adopt.
With the IEnvA certification, we were able to develop metrics specific to our operations that will allow us to track, monitor, and improve our performance, as well as quantify savings we can make, which can help improve profitability. While it is too soon to evaluate the operational or strategic impact of the certification, we can see that it helps coordinate our efforts, and demonstrates a verifiable commitment to improving our environmental performance.