Technology: Backbone of the air cargo industry

The air cargo business has historically been slow to adopt digital documentation, resulting in a dependence on manual and, at times, error-prone procedures. However, things are changing quickly.

Leaders in the industry are more focused than ever on establishing new digital supply chains to promote operational excellence and differentiate themselves from the competition.

According to Judah Levine, Head of Research, Freightos, the air cargo industry was in the early stages of the shift to digital sales when the pandemic began. At the end of 2019, carriers representing 10% of total industry capacity were making bookings available on third party online platforms like WebCargo by Freightos.

Logistics and freight forwarding businesses are preparing for a digitalised future in which they will be able to conduct all communication through a single system. However, in order to simplify this futuristic strategy, challenges must be tackled today and resolved.

Everyday Challenges
As with other aspects of modern-day life, technology is assisting in making many everyday challenges simpler, and creative technological solutions are especially beneficial in keeping up with the latest regulatory developments and streamlining data administration.

But technology has its own set of issues. One of the most essential aspects of technological improvements in air freight is data. In a fast-evolving business, how is the industry keeping up with accurate data?

“One of daily challenges is to maintain data accuracy in a rapidly changing industry. This requires robust data integration systems and quality checks on our part. Further, market volatility, driven by factors like fuel prices and geopolitical events, demands dynamic pricing algorithms for real-time rate adjustments. Something that’s been in the news lately–carbon emissions and regulations–is another challenge for our industry, at large. To help our clients navigate global regulatory compliance, we created compliance tools such as our CO2 calculator,” said Levine.

“We increased our investments and continuously changed and added more functionality with our agile teams and partners. This way of working has now become a standard and will help to accelerate the digitalisation of the air cargo business.”

Harold Elfring, ACL Airshop

Innovative technological solutions are useful for maintaining current with regulatory changes and streamlining data administration. As technology has improved, freight transportation has become more clear, instantaneous, and efficient.

“The challenges that we see are the different silos or many parties that are involved by moving cargo from A to B. One of the strategies that we have implemented is to develop an open and secure system architecture, so customers and others can push and/or pull data that we have in our systems. In eCommerce technology, this is called a headless architecture, which makes our system open and scalable,” said Harold Elfring, our Director of Technology and IT Systems for ACL Airshop.

Streamlining the supply chain strain
Global supply chains have been put under immense strain as a result of unforeseen situations like the Covid-19 pandemic and the exponential expansion of international eCommerce. These interruptions have underlined the critical need for creative solutions to simplify and smooth the supply chain.

The digital service provider is a significant factor in this shift. We asked the industry's experts, keeping the challenges in mind, how we might smoothen and streamline the supply chain strain.

“To tackle issues regarding the strain on the global supply chain and subsequent surge in international eCommerce after the pandemic, IAG Cargo is leveraging technology in several ways. We have expanded the use of robotics to enhance our staff capabilities, particularly in areas like monitoring and controlling units and shipments – ensuring that we are able to process cargo quickly, safely and efficiently as it passes through our operations,” said John Cheetham, Chief Commercial Officer at IAG Cargo.

“As the rate of eCommerce grows, we are actively working towards achieving 100% electronic Airway Bill (e-AWB) adoption throughout our network by the end of the year as part of our digitisation programme - Destination Digital. This will not only limit the human error that can occur when processing large orders via paper, but it is improving operational efficiency and also has a positive impact on the environment,” Cheetham added.

“One of daily challenges is to maintain data accuracy in a rapidly changing industry. This requires robust data integration systems and quality checks on our part.”

Judah Levine, Freightos

Destination Digital intends to minimise the use of physical paper and indirectly reduce aviation fuel usage by reducing the carrying of physical paper. Improved communications and data quality will allow for more efficient information flow. Reduce manual process errors and improve operational efficiency by reducing administrative effort, reducing human input errors, and eliminating the risk of losing important documents.

Adoption of air cargo during the pandemic-driven supply chain delays, carriers and forwarders were eager for real-time information, quick, dependable bookings, and the opportunity to deliver the best experience for their clients even in times of stress.

“In today’s rapidly changing world and climate conditions, the more clarity and data you have in your supply chains, the easier it will be to deal with events beyond your control. For example, say one of your export-side airports is affected by bad weather in China or India. The faster you hear about gathering storms–or labour disruptions– in the East, the faster you can reroute your cargo to nearby hubs and keep your supply chains moving,” said Levine.

“The pandemic boosted eCommerce and so did a lot of our customers that moved all the packages. We already had digital tools in place and during the pandemic we listened very well to the needs of our customers during that turbulent time. We increased our investments and continuously changed and added more functionality with our agile teams and partners. This way of working has now become a standard and will help to accelerate the digitalisation of the air cargo business,” said Elfring.

Tech Investments
According to global market insights, the air cargo market was valued at $200 billion in 2022 and is expected to grow at a CAGR of 5% between 2023 and 2032, owing to the increasing need to transport high-value and time-sensitive products such as electronics, pharmaceuticals, perishable goods, and auto parts. And streamlining technology plays a vital role in market growth.

There are various technological advances that will help the air freight industry run more efficiently and cost-effectively. Greater advancements in connection and visibility will be facilitated by the digitisation of the underlying data critical to the sector in the future, including the implementation of dynamic pricing and the leveraging of artificial intelligence (AI) for additional savings in many possible areas of air cargo.

“WebCargo is always investing in ways to create value for carriers and forwarders. Two recent developments include the enablement of interlining between carriers directly on the WebCargo platform, and the launch of the WebCargo Airline Dashboard, which provides airlines with visibility to nearly real-time industry data, as well as airline-specific lane-level insights, like sophisticated data on customer price sensitivity, how soon before departure customers book or cancel, data on origins and destinations, and other market trends. Our Airline Dashboard also pulls data from the Freightos Air Index (FAX), our new benchmarking air cargo spot price index that is published daily to provide industry stakeholders with an all-in spot rate across multiple weight breaks and over a dozen trade lanes,” said Levine.

“To tackle issues regarding the strain on the global supply chain and subsequent surge in international eCommerce after the pandemic, IAG Cargo is leveraging technology in several ways."

John Cheetham, IAG Cargo

Stakeholders are adopting technology because it is thought to deliver supply chain uniformity, adherence, and precise performance as needed by consumers, and it is also sustainable.

“We have invested a lot in our Digital Suite, a comprehensive set of digital tools which help our customers on different areas, like ULD management, tracking ULDs and a digitalized repair processes that is done by different parties involved in the FindmyULD App. In the future, we see more digitised processes and we call this the "uberization" of the air cargo industry,” said Elfring.

“IAG Cargo has recently made substantial technological investments to support our transformation plans. One significant investment involves the implementation of a new Material Handling System at our Madrid hub – which enhances efficiency and automation of cargo handling processes.

Additionally, we are in the process of moving to a cloud-first approach, we expect 100% of our applications to be migrated to cloud environments in the near future. This cloud migration provides us with scalability, flexibility, and improved data accessibility.

We will continue to invest in our digital platforms, with ongoing enhancements to our online booking capabilities throughout 2023 and into 2024. We are witnessing a growing customer adoption of digital booking services across our global network, further emphasising the importance of our technological investments,” said Cheetham.