'Tech'tonic shifts in air cargo industry

As per TIACA’S 2022 INSIGHT Report that was released this March, even with companies in the aviation sector continuing to improve efficiencies and accelerating their digital transformation, 34% have yet to start their digital transformation. Is the air cargo industry a laggard when it comes to digital transformation?

Techtonic shifts in air cargo industry
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That digitalisation could be a potential game-changer and a huge catalyst for the fortunes of the air cargo industry is a given. This point was further driven home this March after TIACA'S 2022 INSIGHT Report revealed that around 34% of the 204 respondents who represented different parts of the air logistics supply chain have yet to start their digital transformation.

The report was based on the outcomes of the second 'TIACA Air Cargo Industry Sustainability Survey' in a bid to chart a roadmap for the sustainable transformation of the air cargo industry.

78% of responders, up from 65% previously, reported that they have accelerated their digital transformation to support continuous improvement and operational excellence. The 204 respondents were made up of airlines, freight forwarders, airports, ground handlers, IT providers, GSSAs (General Sales & Service Agents), and representatives of shippers, manufacturers, academia, and the consulting domain.

TIACA urged the industry and cited, "The industry needs to continue pushing forward as industry standards, modern and robust, are now available. Legacy players have transformed into digital companies and successful digital-native companies are challenging the status quo and introducing modern practices. It is time for the 34% who are not yet adopting digital processes to accelerate the pace!"

"The industry needs to continue pushing forward as industry standards, modern and robust, are now available. Legacy players have transformed into digital companies and successful digital-native companies are challenging the status quo and introducing modern practices. It is time for the 34% who are not yet adopting digital processes to accelerate the pace!"- TIACA

Pandemic sped up digitalisation
During the Coronavirus pandemic, air cargo served as a 'lifeline' and helped make airlines some profit, even as the total air freight capacity continued to remain muted in 2020 and later picked up in 2021.

With a capacity shortage and a severe supply chain crisis, the aviation industry quickly pivoted and gravitated towards digitalisation to streamline its processes and bring in the much-needed visibility during the pandemic. Digitalisation is now seemingly more about offering customer satisfaction and as the next step in the air cargo industry's evolution.

The pandemic aided the rollout of digital solutions and data-sharing platforms and more recently, digitalisation is also being seen as an enabler that can help drive sustainability that has become critical to its future.

Digitalisation - adapt or perish?
What began as a shift to E-Airway Bills(e-AWB) in 2010 to reduce paper has today evolved to encompass a whole gamut of disruptive technologies like automation, advanced analytics, machine learning (ML), blockchain, artificial intelligence (AI), and IoT (Internet of Things) that are changing the way air cargo industry had functioned.

Further, the pandemic and the resulting supply chain crisis escalated congestion and capacity shortages to a level that pushed air freight rates to historic highs post the pandemic.

"With respect to our overbooking forecast system, the model predicts how much weight and volume will show up in the warehouse, based on how much is booked. This helps make the business case get easier for airlines."- Nathanaël de Tarade, Wiremind Cargo

This led forwarders, airports, and airlines to increasingly look towards technology and data for more agility and for some semblance of predictability. The exponential rise of e-commerce globally also propelled airlines and other stakeholders to adopt end-to-end integrated logistics solutions for delivering e-commerce shipments. As spot-market bookings for cargo rose in 2020, spot sales also climbed up for airlines.

With long-term contracts, one-on-one negotiations with freight forwarders, and bulk allocation having run its course, digital booking platforms became the need of the hour allowing players to price dynamically and capture top dollar in a seller's market.

Trade association IATA helmed the modernisation of cargo standards and rolled out tech tools like ONE Record, Interactive Cargo project, Cargo Connect, e-freight / e-AWB, and FEDeRATED, some of which are also in the project phase. Further, technologies like AI and ML can now allow increased visibility, and efficiency and allow for informed decision-making when it comes to air cargo.

The promise of digitising the supply chain is well captured by Oliver T. Neumann, Founder & Managing Director of cargo.one. who says, "The air cargo market is a $102 billion market which is still offline and immensely intransparent. It takes a forwarder hours to get quotes from airlines, bookings aren't made online, documents aren't digital and communication is asynchronous. By building a platform that solves these issues, we will bring more transparency to the overall market and enable freight forwarders to book freight on a specific flight at a specific dynamic price with a simple click of a button."

Few key developments

  • Launched in 2006, as a non-profit organisation under the Korea Customs Service, CUPIA (Customs Uni-Pass International Agency) is a professional trade facilitation solution provider that provides customs modernisation and consulting services that can develop and operate e-customs and single window systems in economies across the globe. Today it is used by players in more than 30 countries globally.
"Etihad Cargo is assessing whether implementing cutting-edge AI technology can ensure a complete end-to-end process that will benefit customers, transform airfreight operations and real-time information over the last 12 months." - Martin Drew, Etihad Cargo
  • As far as the adoption of digital cargo booking among forwarders and airlines, Air France-KLM's myCargo platform launched in 2018 paved the way forward. It is an application programming interface (API) that allows customers to directly connect to its quote and book shipments including pharma shipments at any time of day. Shippers and forwarders also could use the platform to request quotes, track their shipments, and configure notifications.
  • In March 2021, IATA launched the IATA Enhanced Partner Identification and Connectivity (EPIC) platform to support the digitisation of the global air cargo supply chain. EPIC simplifies the complex process of making digital connections across the air cargo value chain including enabling the efficient exchange of critical information such as messaging capabilities and identities.
  • FIATA or the International Federation of Freight Forwarders Associations which represents freight forwarders in 150 countries has recently announced a document update to ease the work processes of its members, allowing them to become digital freight-forwarders. The FBL solution is expected to bring its members a pragmatic solution to move from paper documents to paperless FIATA BLs(Bill of Lading), which can be issued directly through their everyday tools.
  • More recently, WebCargo by Freightos, the digital booking platform for air cargo, is in the process of introducing a new capability in its booking platform allowing customers to estimate greenhouse gas emissions for bookings done.
  • This May, leading third-party logistics player Tiger Logistics from India announced the launch of a price discovery and supply chain automation platform that is slated to offer cross-border solutions for ocean and air shipments along with first-mile transportation, last-mile delivery and customs clearance, cargo insurance, and financing among some of the features.

Use cases aplenty
Among the several use cases for digitalisation include pricing, figuring out the capacity management and cargo mix, minimising disruptions in operations affecting shipments, and creating a forecasting model for demand, belly capacity, and rate forecasting are significant.

"We also launched our CO2 calculator in 2021, which is still unique as we are the only one calculating the exact CO2 emissions per flight, so that freight forwarders can really find the most efficient option to select when making a booking."Matthieu Petot, CargoAi

There has been a spate of digital distribution platforms that combine and streamline the various elements of the booking and shipping process. This has resulted in a decline in offline, two-party negotiations and initiated a move toward an active digital marketplace.

Newer technologies like advanced analytics and machine learning can also help companies automate some of their back-end and customer-facing processes and also raise the levels of their capacity utilisation.

Shedding light on how technology can contribute to revenue increase, cost reduction, knowledge management and enhanced productivity, Nathanaël de Tarade, CEO of Wiremind Cargo told the publication, "Our most recent launch is CargoStack: a SaaS suite of air cargo management solutions, including a core CMS and strategic modules such as a Revenue Management system and SkyPallet, our capacity optimisation system. As we have just launched CargoStack as a new and scalable product, we are starting to talk with potential customers who are looking to enhance their systems and AI capabilities. As to SkyPallet, we are regularly onboarding new customers. Lately, freight forwarders, in particular, have reached out to us because the system can help them better plan their capacity and optimise the buildup of their ULDs."

Nathanaël de Tarade, CEO of Wiremind Cargo

Nathanaël de Tarade, CEO of Wiremind Cargo

De Tarade added, "With respect to our overbooking forecast system, the model predicts how much weight and volume will show up in the warehouse, based on how much is booked. This helps make the business case get easier for airlines."

Leading air carrier Etihad Cargo entered into a Proof-of-Concept(PoC) agreement with SPEEDCARGO last year to use artificial intelligence to measure cargo dimensions and optimise capacity planning, and leverage this deployment across the entire value chain, from airline bookings to cargo handlings by ground handling agents.

Martin Drew, Senior Vice President – Sales & Cargo at Etihad told The STAT Trade Times, "Etihad Cargo is exploring and testing the applicability of this revolutionary technology in the delivery of enhanced service and efficiencies to customers through optimal cargo planning and utilisation within seconds. Etihad Cargo has also continued to invest in and supports efforts toward automated reporting. Etihad Cargo is assessing whether implementing cutting-edge AI technology can ensure a complete end-to-end process that will benefit customers, transform airfreight operations and real-time information over the last 12 months."

Martin Drew, Senior Vice President – Sales & Cargo at Etihad Airways

Martin Drew, Senior Vice President – Sales & Cargo at Etihad Airways

The UAE's national carrier has formed partnerships with several smart industry initiatives, including One Record, Cargo iQ, and the IATA e-AWB. It even became UAE's first airline to implement electronic technical logs, or eTech logs, which has accelerated its journey to paperless airline operations. In 2021, Etihad Cargo launched an enhanced online booking portal, which has reduced booking times to 45 seconds, making the booking process easier and quicker.

Drew added, "Upon successful completion of the PoC, these digital solutions will become effective tools in minimising leakage and optimising offload recovery by up to a third. Through the automation of accurate data receipts, Etihad Cargo's customers will also benefit from highly transparent and accountable billing in addition to faster response times for freighter charter quotations. Through the further adoption of digitalisation, Etihad Cargo will increase capacity by more than 3,000 tonnes per year by maximising cargo across flights and (ULD) configurations in accordance with internal loading rules, equating to a significant increase in revenue yield. Integrating additional data relating to location, temperature, and other critical conditions intoour system landscape will enable Etihad Cargo to make better-informed decisions at the earliest possible stage, benefiting the carrier and our customers."

Several large and mid-sized forwarders are also speeding up digitisation to create better customer and carrier experiences and build up their customer loyalty. A Kuehne+Nagel spokesman told The STAT Trade Times, "At Kuehne+Nagel, we have a decade-long culture of taking a leadership role in the industry to drive all participants (from customers to carrier partners, suppliers, and handling agents) to enforce digitalisation. In air logistics, in particular, we began our eTouch initiative several years ago. eTouch does not only focus on our own activity, it does not only benefit what we as Kuehne + Nagel do, rather it focuses on addressing the key touchpoints and handovers between all parties in a digital manner, using several forms of available technology. These touchpoints range from digital booking channels for our customers to digital document production, to real-time pickup and proof of delivery data management, and also including the ability to access air carrier capacity on a host-to-host basis. Simply stated, the less manual work needed to manage information, the fewer resources needed to chase and correct information, then collectively, the more efficient we become."

The spokesperson added, "As part of our eTouch programme, having deployed APIs with our carrier partners to enable Host 2 Host interactions centered around engagement across many links in the chain, we evidenced that the harder work was not the technical connectivity but rather the understanding and alignment of the processes, what was expected, and how the expectation would sometimes require a different thought process. Look no further than sensor technology. Sensors these days can read the temperature, humidity, shock, light exposure, and a myriad of other pieces of information."

Speaking about the outcomes of some recent digital tools launched by CargoAi an AI-based digital freight management platform that connects freight forwarders and airlines, Matthieu Petot, the company's CEO said, "After the launch of the unique eQuote and eBooking marketplace in 2020, we have onboarded over 5,500 freight forwarders in 103 countries who can book on our 63 airlines portfolio to date. This product is still growing very fast and 50% of the global capacity is planned to be available on CargoAi by the end of the year. In some markets, like Spain, Germany, or France, we represent more than 30 airlines on the platform so the forwarders have a vast choice and save a lot of time. We also have sped up the whole process with booking templates, repeat searches, and allotments, so we are truly providing a tool that helps to be more efficient and save hours of work."

 Matthieu Petot, CEO of CargoAi

Matthieu Petot, CEO of CargoAi

Petot added, "We also launched our CO2 calculator in 2021, which is still unique as we are the only one calculating the exact CO2 emissions per flight, so that freight forwarders can really find the most efficient option to select when making a booking. Finally, we have recently launched our API suite which is tailored for big freight forwarders or digital forwarders who want to embed the data and booking capability directly in their system, the Transport Management System (TMS). We have aggregated all of the airline connections into a single API, making it simple for a freight forwarder to plug it into its system and offer a great experience to all its staff while continuing to build direct connections with airlines that are not yet in our portfolio."

Hurdles
Apart from automation, IoT, robotics, and technologies like AI and ML can help the industry counter inefficiencies like high dwell times, congested cargo terminals, suboptimal use of belly cargo capacity, and aid in the track and trace of missing cargo and help in eliminating manual processes.

Sabari Ramnath, an industry expert on freight and logistics solutions

Sabari Ramnath, an industry expert on freight and logistics solutions

Despite the many opportunities digitisation brings, Sabari Ramnath, an industry expert on freight and logistics solutions cautions that the pace at which the adoption of digital tools is taking may be quite slow for the industry. He says, "When it comes to the technology adoption in the air cargo industry it is slow. Based on my experience, air cargo is still a by-product even though it was in focus during the two-year pandemic period. In air cargo, digitisation (like, e-Airway Bill) is happening at a fast pace now."

Ramnath adds that the pace of digitalisation and digital transformation is slow since air cargo has many stakeholders in the supply chain and there is a need for the entire community to join in such initiatives.

"Technologies such as the Internet of Things (IoT), Artificial Intelligence (AI), and Blockchain help the air cargo industry by enabling new ways of increasing process efficiency, enhancing interaction with customers, and driving new business models."- Sabari Ramnath, industry expert

"Apart from the airlines, even freight forwarders and ground handlers are now being brought on to join IATA's ONE Record initiative which is a positive sign, but we need to bring all the stakeholders to join in this type of initiative. This is a price-sensitive industry and seasonality also matters. When we compare specialty and time-sensitive products with general cargo, the volumes are less and sometimes seasonal, so the price is high. Therefore, to start with, the specialty products have significant opportunities to apply technology. Technologies such as the Internet of Things (IoT), Artificial Intelligence (AI), and Blockchain help the air cargo industry by enabling new ways of increasing process efficiency, enhancing interaction with customers, and driving new business models. Unlike common belief, a technology like IoT not only has a lot of potential for special cargo but also for general cargo." Ramnath added.

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