Technology comes with its set of advantages and drawbacks. Is the international air cargo industry maximizing the use of technology to its full potential? CARGOTALK spoke to industry professionals to get their opinion in this regard.
-Abigail Mathias
Nidal Abou Zaki, Managing Director, Orient Planet Group
Digitalisation is a potential gamechanger and a catalyst for the development of air cargo industry. Cargo operations have been the lifeblood of air freight industry, involving numerous stakeholders across the value chain. The provision of services and the actual delivery of goods are the significant factors of successful air cargo services.
Despite the influx of technology, the air freight space has been facing challenges, such as increase in oil prices and imposition of tariffs, among others and despite the setbacks, the sector has been making tremendous developments. Air freight has been considered as the fastest and least constrained mode of transportation, with land and ship cargo transportation continuing to be the most common. Even though it is still expensive, the growing need for perishables, chemicals, and jewels have given the business a much-needed boost.
The latest technological advancements such as robotics, automation, data science, Blockchain, Artificial Intelligence (AI), Internet of Things (IoT), and drones have been a boon for air freight handlers. These technologies are being inside carriers, warehouses, and on the ground level for loading and unloading. Some of the prevalent solutions in the industry are:
Digitalization
A major gamechanger for cargo ops is the use of mobile technology and digital solutions to replace paper-based processes and tasks that rely on manual intervention. Verifying documents throughout workflows can increase operational effectiveness and make it easier to comply with regulations. A paperless and contactless transportation environment accelerates cargo processing, improves customer satisfaction, and increases operational transparency, while generating considerable cost savings.
Warehouse ops automation
A closer connection and monitoring between airline and ground handling systems are a must to increase efficiency in the receipt, processing, and shipment of products. To manage warehouse ops and maximize space usage, improved load planning tools are a must. An increase in automation results in lower costs, quicker turnaround times, reduced error rates, and profitable space allocation.
Products & services diversification
Merchandising has become a tool to retain existing business. Stakeholders are under pressure to differentiate value, while boosting their profits through potential for auxiliary upselling and cross-selling. A flexible air cargo management platform promotes innovation and paves the way for the emergence of new business models among the stakeholders.
Collaboration
Supply chain transparency is fuelled by integration of stakeholder systems into a single platform. They have greater end-to-end visibility, shipment statuses, and essential actions by leveraging to real-time info and data-driven insights.
There is agility to handle dynamic cargo operations, improve customer service, and increase operational effectiveness. The key to enhancing consumer experiences lies in adapting to the industry standards and enabling end-to-end interaction between the airlines, the ground handlers, and other stakeholders.
Steven Polmans, VP, Business Development & Free Zone, Abu Dhabi Airports
Technology in air cargo is not being used to its maximum potential, but the case is ot the same for the industry. Many industries can do a lot more with digitization. However, it is not solely about implementing technology, it must make sense from an operational and financial perspective.
A few years ago, my response would have been different to this query, but I see so many initiatives being taken of late that makes me think that we are on the right path.
The technology we are implementing can help air cargo in various ways. It can improve the service or the processes of an individual actor, and contribute to the overall transparency of the services offered by our industry.
It is important to keep an eye on the long-term vision of how a modern digitized industry might look like. The challenges are once again not specific for air cargo, but for digitization. One is making the business case, the other is about people and change management. This last point is often forgotten or underestimated.
We at the Abu Dhabi Airport are a facilitator than an actor in the air cargo process. Our digitalization efforts do not impact cargo ops the way it does on the passenger side. A good example is ATLP, a platform facilitating trade through sea, land, air, industrial and free zones. It enables transparency, simplified procedures, and efficiency, helping all to contribute towards ADA’s vision to be a leading global trade and logistics hub.
Salini M, Marketing Director, Fresa Technologies
Technology in air cargo is used in a much-advanced fashion than other modes of transport due to IATA Standardization and IATA e-Freight Initiative for paperless transactions. Several industries are presently being transformed by tech advancement, particularly air cargo.
AI has been used to automate all processes in air cargo. Even though current technological resources such as label printers, PDA scanners, automated robots play a key role in providing a faster update of information and transit of cargo. With innovations in AI, the application of the same in document processing can improve air cargo largely, and services can be pushed to their limits.
Many tech solutions have been implemented to provide customers in the industry with a cost-effective and efficient service. Web services on e-AWB, Cloud based ERPs solutions and IATA Regulated messaging solutions for FFR, FWB, FHL and FSU are examples of cost-effective options for driving stakeholders and customers to business growth and service options. With its cutting-edge freight software solution, Fresa, focuses on providing a secure solution. With its cloud-based software, it also gives new updates. The Fresa software application includes 100+ report formats and a modern interface that allows users to generate documents with the click of a button.
Pradeep Luthria, Senior Partner & Chief Practitioner, Saiber Innovation Technologies
The air cargo sector has lot of potential to grow. There is room for improvement in terms of efficiency, sustainability and an overall reduction of cost. With the goal of a Net-Zero footprint by 2050, sustainable aviation fuel (SAF) could be an influencer. As we go forward, tighter intermodal linkages can help to lower logistics costs. There are conflicting views on the short to mid-term prognosis for air cargo.
Recessionary winds seem to be blowing and there is an expectation that air cargo volumes may dip. Aircraft manufacturers keep getting orders for freighters and retrofits. Digitalization could be a gamechanger for the air cargo industry. TIACA’S 2022 INSIGHT Report revealed that 34 per cent of the 204 respondents said, many are yet to start their digital transformation. The report was based on the outcomes of the second ‘TIACA Air Cargo Industry Sustainability Survey’ to chart a roadmap for the sustainable transformation of the industry. Technology is a dynamic element—it keeps evolving.
Technology a boon or bane?
Like other industry shift from paper-based to digital process is an ongoing process. Digital AWB starts the conversation in this area. Information sharing from an intermodal context via platforms/portals, APIs and Blockchains have become more visible now. Today’s customers demand options and real-time information about their cargo in transit, which the service providers must provide. The case for automation and integration are contemplated because indeed they are cost-effective approaches.
Historically speaking, cargo airlines enhancing the user experience was never a priority due to the inherently the industry’s B2B nature. This mindset and associated investments does pose a challenge in traditional-thinking boardrooms. Many freight forwarders lack the incentive to invest in technology.
Leonard Rodrigues, Head, Revenue Management & Network Planning, Etihad Cargo
Traditionally, the air cargo sector has lagged in terms of adopting new technology. However, we have seen a surge in development and utilization of digital solutions over the last few years.
At Etihad Cargo, we reached the first major digital milestone in overcoming the challenge of locally based applications at 2018 end with the implementation of iCargo, which consolidated six legacy systems into one. To achieve this, we overhauled our booking processes and platforms and migrated our front-end systems to the market-leading, fully-integrated IBS iCargo platform. While technology is not currently being used to its potential in the industry, as is true with many other industries, the sector is making a great deal of progress.
Unlike some sectors, including passenger operations, air cargo remains a niche segment. Total air cargo revenue peaked in 2022 to US$201.4 billion but is on a path to return to a more traditional US$100 billion. The passenger business, in comparison, is expected to generate yearly revenues of more than US$1trillion within the next three years. It makes sense that there would be less investment and, therefore, fewer technology options available in the air cargo industry. However, there has been a technology boom in the sector, with AI, Machine Learning (ML), market place and Software as a Service (SaaS) solutions being adopted at a much faster rate than previously.
A barrier to the adoption of technology is there are fewer common systems with open interfacing than in other sectors. So, the integration phase takes longer period and requires more investment. However, we are seeing an increase in technology options, and tech-savvy carriers are adapting their infrastructure to enhance the customer experience and achieve efficiencies faster. If we look at two types of technology utilized in the air cargo sector—Artificial Intelligence and Machine learning—as an example, we can see that they have helped improve the bottomline for carriers and customers by facilitating better decision-making.
Etihad Cargo has invested in AI solutions to assist ground handlers in calculating cargo dimensions efficiently. In partnership with Speedcargo, Etihad Cargo is trialling automated dimension and volume scanning to roll out digital solutions that will optimize efficiency and offload recovery. Managing all three dimensions of shipments will also allow the carrier to call the right type of shipment that can complement the current bookings. Etihad Cargo is also using AI to set bid pricing, or dynamic pricing, which enables carriers to adjust pricing based on a variety of criteria, including real-time changes in supply and demand, fuel prices, seasonality, and labor market conditions. Dynamic pricing optimizes the price between supply and demand at a network level, with contextual data benefiting both the buyer and the seller. Buyers benefit from more affordable pricing, and sellers benefit from selling at the right price point.
On the one hand, the careful introduction of AI in the right processes is cost-effective because it allows for solving problems that we could not solve traditionally due to a lack of resources. On the other hand, the usage of ML has a marginal cost and can be applied broadly, where revenue improvements are limited. For example, Etihad Cargo is using ML to forecast ‘show-up rates’—how many shipments, booked close to the departure date, will arrive at the airport on time to be loaded onto the aircraft. There is no real equation to solve, but ML detects patterns in no-shows and informs of possible no-show risks for Revenue Management to act upon.
ML is being used to great effect to clean up data, identify missing information, and remove errors in messaging. This solution was first developed as part of a hackathon hosted by Amadeus with Etihad’s collaboration. Students developed an application to reduce the need for manual corrections in the processing of messages and increase data quality by retrieving and processing as much data as possible from previous messages.
The usage of iCargo has brought advantages in the cost-efficiency of API connectivity. This enabled Etihad Cargo to develop our own application programme interface (API) so it could connect with various other platforms. Etihad Cargo went on to develop this API to boost ops through several innovative initiatives, which enabled us to increase online bookings from zero to 50 per cent within 14 months—fastest for any air cargo carrier. Etihad Cargo has partnered with Web Cargo, CargoAi and Cargo One and worked closely with them to develop direct connectivity with forwarders and elevate our API accessibility for freight forwarders.
Even if a digital solution is developed to address a specific problem, the challenge for using tech in the sector is integration and modularity. As there are fewer common systems in air cargo than in other sectors, new solutions or applications must be integrated within existing platforms, and additions can prove to be complicated, with upgrades coming with a high list of throwaways. The sector has not attracted several people with the skill set to develop and launch viable technology for the industry. However, we have seen an increase in new talent entering the sector and the adaptation of systems and solutions from other sectors.
Etihad Cargo is targeting skills for recruits that will help us progress our digitalisation strategy. We are providing training to support these skills within the team. We launched a new CRM system in our customer contact centre to empower agents with more customer-focused data. The new system has provided customer service team with improved tools and his/her history, purchase records and sales interactions.
Etihad Cargo launched an enhanced booking portal to improve customer service, and we have linked with major third-party booking portals to ensure customers have options when they want to book with us. The carrier has made it possible for customers to contact us via whatever method is their preference, be it via email, telephone or through our booking portal. Using ML to forecast show-up rates has enabled us to minimize spoilage on our flights. In the coming months, we will be announcing further tech updates and introducing new solutions to enhance the customer experience and booking process.
Ruth Calugay, Marketing Executive, Sales & Marketing, SkyNet UAE
Through technology and digital innovation—the air cargo sector will be able to transform from paper-based documentation that facilitates global air cargo movement to a contactless environment to enhance cross-border trade resilience in the future of COVID threat.
Customer-centricity is regarded as key to long-term success, particularly in logistics. When customers can track their orders from the warehouse to their door in real-time, they feel in control.
By providing this control, the customer has a more fulfilling delivery experience and is more likely to return. Technology is transforming businesses around the world, including the logistics industry. It is important that the logistics industry and businesses can keep up with technological advances. Those who do not are at the risk of being left out of the market and may lose their business.
Audrone Keinyte, CEO, Bluebird
The technological improvements for cargo are happening in the warehouse processing, packing, and tracking. The technology improvement for the aircraft operation itself (in which we specialize) in is aligned with the aircraft operation industry. There is still room for improvement on the aircraft cargo side, such as working harder towards paperless processes, temperature control monitoring, and utilization optimization.
Technology has helped air cargo by improving information flow, reducing cost by saving time and manpower, improving reliability and traceability. The implementation of new technology is always a challenge for reasons such as different locations of the users, training, aligning different service providers. The investment is often costly and needs to be justified.
Glyn Hughes, Director General, The International Air Cargo Association (TIACA)
Future success of the air cargo industry will require enhanced data integration, timely and effective digital interactions, multi-channel distribution and increased information transparency to provide high-quality seamless and predictable solutions required by an ever increasingly more sophisticated customer base, who are engaging in increasingly more complex supply chains. Over the past decades, manual processes enabled the industry to get out of the starting gate and establish air cargo as a key enabler of a successful global economy. But those days have gone.
We now need to be on the cutting edge of digital solutions. Border management, compliance, and satisfying customer expectations require stakeholders to embrace technology and automated solutions. Over the coming years we can expect challenges with connectivity, capacity, facility availability and advanced levels of data exchange. These demands cannot be satisfied unless the industry accelerates along the path of digital transformation. The license for successful growth.
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