Adapt or perish

Rapid adoption of technology is one of the many important ways to elevate the value proposition of global air cargo industry. Wait! This is not just about going paperless. There is a new wave of technology that either exists or is in the making to redefine the way goods get transported by air. Reji John…

At the recent CNS Partnership Conference in Orlando, USA ndreas Raptopoulos, CEO of Matternet, a company that manufactures a small, unmanned aerial vehicles (UAVs), more popularly known as drones, announced that his company will work with carrier Swiss WorldCargo and postal logistics firm Swiss Post on a project to test the Matternet ONE drone as an automated cargo delivery system. That is certainly a first for a cargo carrier to partner with a drone developing company to possibly look at parcel deliveries in the near future.
“This is not a dream – the technology is all here,” said Oliver Evans, chief cargo officer of Swiss WorldCargo, the air cargo division of Swiss International Air Lines. “But why isn’t this happening?” He said the reasons why the industry has not yet embraced drone delivery are regulations, public acceptance and “us,” referring to air cargo industry professionals. “We are simply not ready as an industry to deal with the regulators and confront public acceptance.”
At the same conference, Ram Menen, former Emirates SkyCargo head and an air cargo industry veteran, also put the onus on his own industry members for lack of technology adoption while making his opening key note address.
“It seems the only way to move ahead is to fire anyone over 25 and start recruiting 10-year-olds.” The industry has spent many years trying to adopt technology “that any 10-year-old will have no hesitation to use. Meanwhile, some people here still have trouble turning on their cell phones,” Menen joked about the extremely slow technology adoption rate in the global air cargo industry. “If you don’t change, then change will be forced onto you,” he said. “The change will come from the likes of Google and Amazon.” “Change,” he said, “means more than reacting to something, but preparing for change well in advance. You have to change a little bit before the actual change happens.”
Businesses around the world today rely heavily on air cargo to power their supply chains. Tracking technology that provides information during air shipments not only transforms the way they do business, but also allows them to stay ahead of the competition in their industry. As air cargo tracking solutions continue to evolve, businesses are discovering new ways to increase efficiency and reduce costs. While there is still a demand for solutions that simply track the location of a shipment, the desire for solutions that provide more insight into supply chain conditions is rapidly growing.
Machina Research forecasts rapid growth in the adoption of machine-to-machine (M2M) technology throughout the supply chain as companies look to realize operational efficiencies. Contributing to this demand is also the increased use of container shipping, combined with more stringent regulatory requirements, for example, the need to track foodstuffs throughout the supply chain.
Businesses want a deeper dive into the analytics of their shipments, especially in industries that transport high value cargo. We are seeing the many benefits of cargo tracking technology in industries such as food and beverage, art, and electronics.
“The biggest challenge for the air cargo industry is limited investment and reliance upon very few legacy providers and old business models. There have been few disruptive new entrants into the game, therefore innovation is lacking. Our goal is to be disruptive and change the game in terms of business model and dramatically lower the costs. For example, some airlines have costly agreements that all their air waybill (AWB) transactions must be channeled through only one legacy provider or another. This means they are not in position to take advantage of new technology or zero cost channels to receive freight waybill (FWB) (at zero cost) from forwarders who adopt the latest technology. It is a shame,” said ays John DeBenedette, Managing Director, Worldwide Information Network (WIN). WIN is an online platform for independent freight forwarders to connect with partner agents, airlines, container lines, and other logistics service providers for secure, digital, shipment-level collaboration in the cloud.
Cargo tracking solutions are instrumental in helping food suppliers monitor their produce. The technology can provide supply chain managers with extensive visibility data, and temperature, humidity, seal tamper and exposure to light alerts for each cargo or container. For example pharmaceutical shipments by air, a very high yield commodity for the industry, has to be under the constant watch to ensure that the shipments ultimately arrive the end customer in total integrity. This means a completely supply chain visibility to the shipper in its entire transit. OnAsset Intelligence, a US based asset tracking technology company has developed several products for the cargo industry to keep track of assets in transit. Its products offer real-time tracking for all modes of transportation including land, sea and air – the security and condition of your assets available anywhere on Earth (or above it).
Although asset tracking has been around for years, solution providers are constantly challenged with developing more sophisticated capabilities. Such innovation makes it possible for companies to collect valuable information and maintain the integrity of their assets traveling across the sky. Collecting a large amount of data over time allows companies to run deeper analytics, and have better insights into their shipping solutions and operational efficiencies. As more organizations adopt this technology, it will push solution providers to develop technologies to provide even greater visibility into the conditions affecting the supply chain. Businesses making worldwide shipments today are poised for an exciting future.
Reports indicate that airlines are keeping their freighters, but are also pinning hopes on efficiency improvements by using newer and more nimble aircraft in an overdue effort to further chip away at expenses. And according to the International Air Transport Association (IATA), underlying trends for North American volumes are, overall, rather positive. Trade is growing, and the month-to-month comparison of volume year-to-date indicates that capacity fell 2.8 percent—continuing the recent trend of improving load factors. And because the new air cargo environment has become increasingly complex these days, shippers who find it harder to book payloads on freighters are often opting for passenger aircraft with excess belly space, further maxing out loads and improving the bottom line for carriers.
There is a lot happening in how advance technology is used in cold chain solutions offering products and services to shippers with robust visibility tools and empowering them with total control on their cargo in transit. And certainly 3PLs are focused more than ever on establishing networks for this service, as healthcare is viewed as a long-term growth area in airfreight. “Meanwhile, shippers are doing a better job of measuring their carrier’s performance when it comes to tracking and tracing temperature control. It’s become a real differentiator, particularly when serving foreign markets,” said Thomas Cook, CEO of the consultancy Apex Global Supply Chain Management.
Everyone knows that innovation is hard in this industry. Look no further than the e-freight initiative launched by the industry in 2006. IATA is justifiably happy that the target of achieving 20 percent e-AWBs by the end 2013 has begun to look achievable for the first time, but if you consider that represents only a 20 percent success rate after seven years of launching, it doesn’t appear all that brilliant. Now there are reasons for this. It is a global goal and there are still many countries where even reliable electricity is still a problem and the e-AWB target is the last thing on their mind. But even the developed world is lagging behind and this is concerning to many innovators in the industry, especially since they see their passenger divisions and indeed other industries around them move in the e-commerce world at a much faster pace.
Innovation and technology adoption in air cargo industry is more than just going paperless and just digital. It is also about use of advance technologies in transportation to scale the peculiar demands of current business challenges. For example, the opportunities and challenges thrown by the proliferation of e-commerce and the subsequent challenges for the supply chain managers of delivering goods and products to the right markets at the right time to eventually reach the end consumer at a time he or she demands.
Look at what drones are capable of doing for the logistics sector. Though they are yet to be used for commercial purposes, the technology is available and it is a matter of time that the regulations are in place to roll out this technology to address deliveries of cargo in the last mile.
The primary aim of the project by Swiss Post, Swiss WorldCargo and Matternet is a Proof of Concept to clarify the legal framework, consider local conditions and explore the technical and business capabilities of the drones. Dieter Bambauer, Head of PostLogistics, Swiss Post, “With drone technology, we are testing a possible means of transportation of the future already today. Swiss Post aims to always be in tune with customer needs.”
Talking about technologies that will be game changers for the air cargo industry DeBenedette said, secure cloud-based web-services, including secure payment technology, have transformed retail e-commerce and B2B collaboration. “Our industry is still pushing flat files around and proliferating copies of the same data everywhere. Modern cloud based technology is a whole generation newer, and in many senses better, than developments in the pipeline for air cargo. Collectively hundreds of millions, if not billions, of dollars are at stake just to shed our 1960s’ legacy. We need some new thinking and for that we need all the stakeholders in the air cargo chain, including airlines, handlers, and regulators, as well as the different technology providers, to work together to explore the latest technologies,” he added.