The air cargo industry has been undergoing, and will continue to undergo, a major transformation in the way it handles information writes Dheeraj Kohli
The rise of information technology and the advent of the digital world have disrupted all businesses across the world. The Air cargo industry is no exception to this. Customers, regardless of the business they are dealing with, expect brands to be up to date with regard to the technology that they use. Once again, the air cargo industry is no exception and is vital to the global economic system. Unlike ocean freight, goods sent via air cargo are generally of high-value and time-sensitive. Keeping this in mind, the industry has been undergoing, and will continue to undergo, a major transformation in the way it handles information.
The challenge of digitisation
Digitisation will modify the supply chains from the originating shippers to their end-customers. We see end-customers making more and more purchases from the comfort of their homes and frequently requesting instant delivery. On the other hand, automation, advanced robotics and powerful forecasting algorithms change the processes at the shippers’ side of the supply chain. This brings about a drastic change of global product flow regarding geography, size and lead times. For instance, instead of one master shipment of 100 units to a distribution centre, 100 individual shipments of one unit will need to be shipped directly to customers. Furthermore, these shipments are not limited to local markets; customers in a much larger and newer geographical areas will be served in this new age.
Another development in the air cargo industry is that the International Air Transport Association (IATA) has established new industry standards and regulations with a view to modernise the sector globally. New business procedures such as Cargo2000, e-Cargo and e-Airway Bill are being touted as industry game-changers. Cargo2000 utilises Electronic Data Interchange (EDI) between partiesto keep track of each step in the air cargo supply chain. E-Airway Bill removes the requirement of a paper Airway Bill. There is therefore no longer a need to print, handle or archive the paper; largely simplifying the air cargo process.
However, the major challenge faced by air carriers is that IT systems used by most of them are decades old in many cases. IATA and other such industry bodies are constantly developing and redefining customs and procedures, and these changes are more often than not technologically oriented.The fundamental nature of the air cargo industry is such that it is heavily dependent on information technology systems. Factors such as the globalisation of modern commerce, the need to coordinate with a multitude of third parties and evolving regulatory frameworks add to this dependency on information technology. It is interesting to note that air cargo players are lagging behind their counterparts in the passenger airline sector in terms of the technology they use.
E-commerce and evolving delivery methods are the primary factors driving the shift in the cargo sector. This digital disruption leads to the air cargo industry becoming more and more complex. Players will need robust and flexible information technology solutions to keep up with these changes and the competition. The total number of transactions is rapidly increasing. Experts project that the air cargo industry will witness a steady Compounded Annual Growth Rate (CAGR) of approximately 4 percent over the coming years. The fact that the modern air cargo supply chain utilizes the services of a multitude of players across sub-sectors adds further complexity in the sector.
One way that air carriers can thrive in this age of digital disruption is by crafting mobile apps to provide various services and information to cargo agents, forwarders, and customers. These services can include tracking shipments from mobile devices, checking flight schedules, and managing airway bills. Effective data communication and cooperation are the need of the hour. This way, air cargo carriers can reduce costs and increase efficiency. In this competitive business, the key lies in figuring out how to streamline operations and ensure better customer experience. All this has to be done bearing in mind that, today, customer demands are have become increasingly sophisticated.
The connected customer
A strong understanding of the customer’s needs and wants is essential to succeeding in the air cargo industry. The primary desires of a customer of the air cargo industry can be boiled down to three requirements. These are increased speed, lowered costs and enhanced reliability. By using technology and data, the supply chain can be simplified, reducing the time taken to make deliveries. The cost factor too can be lowered by increasing efficiency through information technology and data communication.
Mobile technology is another factor that has disrupted and has the potential to revolutionise the way air carriers conducts business.
Mobile technology empowers both customers and the carriers in novel ways. It can enhance capabilities to track and process cargo. Furthermore, it can provide on the spot access to critical and actionable data. Messaging services, accessible via mobile devices, can be utilised on-the-go to communicate policy changes, service interruptions, updates, and other vital information. Mobile technology clearly will continue to play a key role in further improving customer service and flexibility by the air cargo industry. And that in turn can only benefit the customers who use their services.
This is why new technology and its adoption become crucial in the air cargo industry. Air carriers must invest in newer technologies in order to effectively keep up with the demands of the connected customer to remain competitive. But this requires several key considerations.
Look to the cloud: By leveraging modern, cloud-based software, air carriers can easily and seamlessly incorporate new solutions into their own enterprise system. Additionally, some companies are now offering catalogue-based cloud services, allowing carriers to choose the specific solutions they need, while helping to drive down operating costs.
Leverage technology for greater visibility
A key component of assisting the connected customer involves knowing where his or her goods are. And as many consumers are already connected to the internet, the foundation for this is, in most cases, already established.
Process data: Driven by data and the ability to visualise information, such as the frequent or recurring routes taken, the types of goods shipped, or the types of services demanded, air carriers will be better positioned to provide customers with real-time updates on flight information and customer service. This also enables the development of customer profiles that offer deeper insight.
To succeed in the digital age, airlines and air carriers need to embrace data and analytics that serve as the foundation for how they can personalize and market their offerings, specifically based on customers’ preferences, as this will ultimately create a more rewarding cargo experience -- which leads to more revenue. However, ensuring that the right software and systems are in place will also enable carriers’ systems to seamlessly communicate with each other, so that their day-to-day operations are as connected as their customers’.
Dheeraj Kohli is vice president and global head of Travel and Transportation for Unisys, a global information technology company that specialises in providing industry-focused solutions integrated with leading-edge security to clients in the government, financial services and commercial markets.