IT adoption in Air Cargo
Are different stake holders of the air cargo industry doing enough innovation and IT development to ensure its competitive position in the supply chain? The realistic answer comes from one of the many veterans of the industry. “The air cargo industry is too slow in implementing technology,” said Oliver Evans, chief cargo officer, Swiss International Air Lines & chairman of the board of directors, The International Air Cargo Association (TIACA). He was addressing an industry forum in Hong Kong recently. While there are some who are upgrading their IT systems more rapidly than many others to stay competitive and relevant. However, it is a fact that many are happy being just upgrading their IT system to accommodate electronic airway bill or implementing barcode labeling. With so much changing in the industry, the pressure is mounting on industry players to upgrade those mainframe systems and invest in truly innovative IT solutions. “Lots of people in the industry think IT as a cost centre but we have found that business and technology are converging. IT is no longer an enabler it is actually a differentiator,” said Ganesh Vaideeswaran, MD, Accenture Software, Freight & Logistics. According to Vaideeswaran the Accenture product is designed and built to increase profitability and drive high performance throughout quote to cash cycle for the air and ocean freight industries. “Key specifics in terms of where we support business to drive high performance are, I would say, right from sales and pricing all the way to delivery. There is a focus on driving increased profitability by streamlining and automating the core businesses by bringing visibility and transparency to the cost and contribution throughout this cycle and to help prevent and capture revenue leakage that happens in the cycle,” Vaideeswaran elaborated. For Accenture, the freight and logistics software is not a software solution but a “transformation”. “We are not just providing a software solution, but what we are enabling is really a transformation, so therefore it is change management and change of mindset the way the managers think about their businesses,” he said. One of the biggest challenges for any information technology solutions provider to the freight and logistics industry is dealing with the fundamental lack of visibility to information and non transparent data sharing. And for Vaideeswaran, it is both a challenge and an opportunity. “For us the challenge is to articulate the value proposition and make people understand what transformation means. In this industry there is fundamental lack of visibility to information throughout the shipping cycle. So bringing transparency to cost, price discipline and price integrity is what we offer.” Dealing with this lack of visibility to information is to approach the fundamental issue within the enterprise. “There is a cross functional visibility of information and of data within an organisation. This data is already present but it is sitting in silos. Through our products we integrate this across the value chain and bring that visibility and transparency.” One important aspect of technology adoption in air cargo industry is digitising information and documentation. And the best example here is the electronic airway bill or e-AWB. The International Air Transport Association (IATA) has been on a global campaign to implement paperless shipments in the air cargo process which will improve efficiency and have a positive effect on the environment. The implementation is performed locally in each country and the airlines who are part of this initiative agree to a single process for the forwarders to deliver freight to the cargo terminals and ground handlers. This new single process decreases the handling and delivery time for airfreight. Digitisation of air freight should be viewed as an opportunity, because without e-freight there is no future for this industry. According to IATA, there are 63 airlines with 3908 airport locations in the global e-AWB project. This represents approximately 80 percent of potential AWB market coverage. While there are 801 freight forwarders with 3665 freight forwarder offices worldwide representing approximately 52 percent of potential AWB market coverage. “This is a fantastic example of cross-border cooperation and will be of immense benefit to businesses and the economy. This clearly demonstrates that where there is a will, there is a way. I am confident that this will motivate other nations and regions as they look to accelerate the adoption of the e-AWB,” said Des Vertannes, IATA's global head of cargo. In fact IATA will be holding the third e-cargo conference and workshop later this month in Geneva with a focus on the business process transformations needed to modernise air cargo and meet the demands of the future. The conference provides a platform for industry professionals with a stake in e-commerce and e-freight to interact with each other and be informed about the latest worldwide developments. The conference will particularly deliberate on how technology can be used to increase predictability, reliability and transparency. Moving to e-cargo requires changes in the technologies used by the air freight stakeholders. In fact, in the recent past, there has been some concerted effort in the industry to speed up IT adoption. This is largely because the industry itself realising how laidback it is in innovation and technology when compared with other industries. Secondly the industry is undergoing major changes driven by external factors like market volatility, financial crisis, capacity growth in passenger markets, security and environmental regulatory restrictions. So technology becomes the natural ally for the industry to tap its full potential. At the CNS Partnership Conference in San Antonio, Texas last month, Jim Compton, vice chairman of United Airlines, said despite air cargo’s myriad challenges, he is more optimistic than at any time during his nearly 30 years in aviation. Compton, who is also United’s chief revenue officer, said that as airlines have returned to profitability, they can invest in other aspects of the business, including infrastructure to support the cargo side. “We can now invest in new technology, better facilities and improved customer service training.” Compton said that United now has the technology in place to move forward with implementation of e-freight. He says United is moving toward its goal of a 22 percent implementation rate by the end of the year. “Taking the paper out has been a long-time goal. The process has been slow, but we are excited about the recent progress.” These days innovation no longer comes from the big IT providers to the industry. Freightos, based in Jerusalem, Israel, provides Software as a Service for freight forwarders to manage their rates and automate their routing and pricing, both internally and on their web sites. This replaces out-dated Excel and PDF management techniques that lead to incredibly slow price quotes (a recent survey showed that the global leaders take almost one week to quote) and inaccuracies. It is attempting to address the flow of data from the carriers to the forwarders and then ultimately, to the forwarders’ customers using technology. Envirotainer, secure cold chain logistics solutions provider, recently signed a strategic multimillion dollar contract with OnAsset Intelligence, a company that offers machine-to-machine (M2M) airborne asset tracking solutions, to equip Envirotainer’s air cargo containers with OnAsset’s real-time data collection and GPS tracking technology. “OnAsset is excited to be working with Envirotainer to operationalize the benefits of real time visibility for cold chain applications. The business impacts are profound, and we’re proud to be part of the team that is leading the charge in delivering this revolution to the industry,” said Adam Crossno, CEO, OnAsset Intelligence.