How IoT and airline alliances will transform the cargo industry

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The latest trends in technology are driving air cargo industry to make changes rapidly like never before. From Internet of Things (IoT) to Artificial Intelligence (AI), the air cargo supply chain is getting smarter with digital technologies. Venkatesh Pazhyanur forecasts the technology trends that will define air cargo in the future.

Venkatesh PazhyanurThe rise of information technology and the advent of digitisation have disrupted all businesses across the world. The 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. With this backdrop in mind, warehouses will embrace digital transformation and airlines and global distributors will revisit their strategies for revenue optimisation. It would be safe to forecast that in the coming years, these changes will materialise, forever transforming the way the cargo industry operates. Here are some examples of how disruptive technology will drive change in the industry.

Smart warehouses will become a reality
The last few years have witnessed a drastic change of global product flows with regard tomarkets, freight size and transportation lead times. A major factor responsible for this is the proliferation of e-commerce. For instance, instead of one master shipment of 100 packages to a distribution center, 100 individual shipments of one package each will need to be shipped directly to customers. Furthermore, these shipments are not limited to local markets; customers in a much larger geographical area are being served in this new age.

To cater to the ever-growing demand for delivery of smaller packages, warehouses will transform from a mere storage location, to a dynamic facility using IoT capabilities, voice AI, wearables on workers, sensors and smart equipment. This will enable faster processing of more shipments and thus generate a higher return on the real-estate investment.

The advantages of a smart warehouse are manifold. Automation makes sense economically, and can enhance customer experience with moderate investment. It allows the supply chain to remain nimble in terms of space, staff and software. Operations can potentially be scaled instantaneously in response to need. Most importantly, a smart warehouse can provide 100 percent visibility - in real-time - thus providing a customer centric experience.

Drones will be used inside the warehouse
As of now, the legal and regulatory framework surrounding the deployment of drones in public spaces is still developing. However, an immediate application of drones and robots in the cargo supply chain will be within the confined space of warehouses to carry out inventory checks more often and more accurately, replacing the largely manual process. Beyond tracing lost or misplaced items, the drones will use sensors to monitor environmental information such as light or temperature for perishable food, pharmaceuticals or livestock, and give a forewarning in cases of unusual noise or movement that may indicate animals are in distress.

The application of drones in warehouses is not merely a far-fetched prediction. To understand how drones and robots are used inside warehouses, we can look at AliBaba's warehouse management system which uses robots to do 70 percent of the work. These robots can carry up to 500 kilograms above them around the warehouse floor and have special sensors to avoid colliding into each other. They can be operated using Wi-Fi and when they run out of battery, they can take themselves to a charging station where a five-minute charge can power them for up to five hours.

New alliances between airlines and global distributors will be forged for long term revenue optimisation
Cargo capacity today is increasing faster than cargo demand due to extra passenger flights and larger aircrafts. However, cargo capacity management has become a significant challenge for airlines. In this background of unconstrained capacity, the traditional approach to yield management will not work as airlines may dump cargo space onto the market, creating a price war.

Therefore, a possible outcome is that there will be a move towards longer-term revenue optimisation based on strategic alliances between airlines and organisations with large ongoing delivery requirements such as postal authorities, major online retailers, global distributors and supply chain management companies.

Alliances and partnerships also empower cargo carriers with better leverage when it comes to regulatory issues. In recent years, IATA has encouraged cargo airlines to collaborate with one another and with other cargo value chain participants to work toward improved quality, more efficiency through e-air waybill and e-freight, and more effective security measures. In other words, cargo airline alliances and partnerships will play a key role inmaximising value in a landscape fraught with challenges.

To sum it up, IoT, cognitive learning and voice AI enabled smart devices and systems, warehouse drones and strategic alliances between airlines and distributors will be key to the air freight industry capitalising on the e-commerce market. The cargo industry needs to embrace disruptive technologies from the consumer world, including Internet of Things (IoT), digital assistants and drones, to increase efficiency and meet customer expectation for greater transparency throughout the supply chain.

Venkatesh Pazhyanur is the senior industry director of Freight Solutions at 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.

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