Importance of Digitalization in Turbulent Times

Introduction

The COVID-led disruption in the global commerce hit the aviation trade in unexpected ways. Passenger travel contracted significantly, also leading to a drastic reduction in the regular passenger & cargo hybrid capacities almost overnight. It was the immediate actions of the Air Cargo fraternity to introduce solutions like ‘Preighters’ and hyperactivity of the remaining cargo aircraft, that ensured the global emergency needs were met. It also brought forward the importance and significance of the Air Cargo business.

Those Air Cargo professionals who were in the thick of finding the desired Air Cargo capacity of cause by new demand patterns, also realized the challenges posed by a poorly digitized Air Cargo ecosystem that existed then and now. ‘Search Book & Transact’, which exists in the passenger side of the business through various e-Commerce marketplaces for the last 20 years or more, simply struggle to function in the Air Cargo business.

Try searching to send a box of cargo as you would find a flight for your seat and you would relate to what I am saying. The industry is chocked with poor digitization and what’s worse? It still has a poor commitment to making itself ready digitally as an important part of such an Air Cargo ecosystem.

Even the top 10 Cargo Airlines in the world, with some exceptions of whose business model revolves around integrated Door-to-Door services are over-dependent on a host of intermediaries, mostly operating in their world of partially digital back-end systems targeting back-end process efficiencies only. The silos of transmitting information one step at a time overwhelm the much-needed velocity needed for real-time updates. Standards that an ecosystem so important to the global trade and crisis management needed 20 years back. After all, Air Cargo is about speed and urgency of moving the goods otherwise why would anyone look for an airfreight solution in the first place?

CargoFlash spent a decade or more nudging and encouraging the airlines’ cargo business to move away from their one-step-at-a-time information flow to a seamlessly integrated cargo management system that can become the basis for capturing and relaying information both internally to manage the operational milestones but also externally customer expectations with streams of lead data taking proactive steps to solve any irregularities in the process. “After all, cargo does not cry like people do”. So, the systems have to be smart enough to bring our possibilities to catch up an itinerary of a booking in terms of transit time and allow demand chains to run realistically with supply chain constraints.

Once the integrated processes are embedded firmly, it is then up to the airline to move to the next great value-added role to use the real-time lead data to reach out to market platforms and build their virtual capacities to do more business and more revenue at lesser cost. Crazy as it may seem, the lead data is simply missing from the most important trade of making air transportation of goods as fast as possible.

Cargo Managers speculating on demand, simple regression analysis on past trends is missing and forget about the ecosystem that can yield warning on capacity bottlenecks emerging or looking it from a lateral view providing fresh opportunities to spot out demand increases to bring additional Air Cargo capacities.

Juxtapose the opportunity of excess demand or supply being led and fed only by gut feel or experience and not by data-driven decisions and you will understand the frustration of a shipper who is wondering why the air freight rates fluctuate like the swing of a pendulum.

Overview of the Troubled Times

The overall Air Cargo industry was greatly impacted by the pandemic. According to the International Air Transport Association (IATA), global Air Cargo demand fell by 8.3 per cent in 2020 compared to 2019. This was the largest decline since the Great Recession of 2008-2009.

The decline was seen in all regions, with the largest fall in demand in the Americas (-11.2%), followed by Europe (-8.9%), Asia Pacific (-7.2%), and the Middle East (-3.5%).

The swing of the pendulum is underway once again, albeit in the other direction this time.

It is being led by recessionary gloom and doom news, high inflation and the geo-political environment of the Ukraine-Russia war. As passenger hybrid capacities come back with the enthusiasm of revenge travel, bringing with it the lost Air Cargo belly capacity, a contracting demand is worrying the airlines this time with different issues.

Air Cargo Rates have started to fall dramatically and once again, shippers are frustrated with the lack of stability in the market, capacity & demand dynamics.

Role of digital intervention in the industry

In the next five years, we see digitalization enabling Air Cargo businesses to use data-driven insights to understand customer preferences and improve their customer experience with real-time data streams for a digitized cargo management system as well as Air Cargo ecosystem. It will then allow the digitally-enabled businesses to take advantage of automation, Artificial Intelligence, and Machine Learning to automate processes and streamline operations & customer expectations. Shippers and businesses that depend on Air Cargo supply chains would always be connected and informed on what is happening to their existing shipments and also provide opportunities to find multiple routes to and options to reach their delivery and cost milestones.

Anyone in the Air Cargo business must understand that the digitalization of the Air Cargo industry is a must to be completed as a clear strategic goal, it should not be avoided or delayed. By introducing digital processes, Air Cargo businesses of airlines can reduce the risk of disruption, allowing them to quickly re-route cargo in the event of any geographic, pandemic or climatic disruption. It will improve the visibility of cargo, providing better insight into where shipments are at any given time. And provide the information at the fingertips to make the whole business resilient.

Two out of Five packages shipped globally now are e-Commerce shipments. The e-Commerce goods enable the shippers to manage their deliveries more efficiently, and airlines need to urgently optimize their operations to e-Commerce shipments and shipping companies. There is a lot to learn from the e-Commerce marketplace places and shipping giants like Amazon. Their business was built around a digitized process.

Their Search-Book-Buy-and-Track solutions allow buyers to track their shipments in real-time and access detailed data about their purchases. How can the Air Cargo business not be entwined with the needs of a new economy of e-Commerce? Cross-border e-Commerce trade is now contributing above 20% of Air Cargo volumes. Once digitally-enabled airlines can then use the API connects with e-Commerce platforms to get real-time data flow on incoming loads to streamline operations, manage shipments, and optimize pricing. They can also use Predictive Analytics to forecast demand and better manage their capacity.

In tandem with the above thoughts, Cargo Flash Infotech is thinking ahead of the curve and designing cutting-edge technology to streamline cargo business and management through an integrated platform. Talk to us as we might be closer to the solution that you have on mind enabling you for the digitized Air Cargo world.