The Power of the Cloud

06 / 05 / 2015

Air cargo has not yet taken full advantage of Cloud computing, according to JAY SHELAT and ROB BRITTON. They explain the benefits to Peter Conway

Air cargo may spend quite a bit of its time in the clouds but has been more resistant than other industries to the other kind, the one IT professionals like to capitalise as the Cloud.

Traditionally, when it has come to IT systems, air cargo departments and freight forwarders have wanted to have their own boxes in the basement, and it is not so long ago that having an in-house system was seen as a competitive advantage. 

In recent years, more and more airlines have come round to the idea of using remotely-hosted IT solutions - ‘software as a service’, to use the jargon. But that, according to SmartKargo, a Cambridge, Massa-chusetts-based IT solutions com-pany, is not quite the real thing.

“These solutions partly comply with the Cloud definition of the National Institute of Standards and Technology [the US government agency that is the recognised global authority on IT standards],  but their systems reside on their own hardware, whereas ours sits on the Microsoft Cloud platform,” says Rob Britton, its vice president marketing. 

“This means that we get the virtual 100 per cent uptime that Microsoft guarantees in their service agreement with us, as well as instant scalability, redundancy and more.” Microsoft provides this by having multiple data centres around the world which can kick in if there is any danger of service being disrupted. 

Microsoft is also used to dealing with much bigger volume and time critical customers than air cargo, as Jay Shelat, SmartKargo’s executive vice president sales and marketing, points out. Shelat is a former air cargo executive whose career included American Airlines and being head of cargo at India’s Jet Airways.

He cites Cebu Pacific, who went live on SmartKargo in August 2014, and which issues 80,000-90,000 air waybills a month. “When we gave these figures to Microsoft Azure [the Cloud platform SmartKargo uses] their development team pointed out that for some banks Azure does a million transactions per minute.

”The concept of SmartKargo is that it is a single integrated solution linking everyone in the supply chain. Anyone from shipper to recipient can access it - subject to access controls imposed by the airline, of course - to enter or retrieve data. 

“Being Cloud-based, everyone sees the information at the same time,” Shelat says. “There is no need to re-key data and you see what is happening right now. There is no waiting for key numbers.

”This instant information is an important benefit, and not just for completing electronic air waybills or capturing data for accounting. 

While legacy systems may take days or even weeks to produce figures on tonnes carried on a particular day or the yield they generated, SmartKargo can provide that analysis instantly. In addition, it has been designed to connect in real time with passenger systems, giving cargo managers instant information on how much capacity will be available. 

Nor does it just gather all this information and leave it for managers to analyse. 

It is also a “neural network”, an IT system that learns and gets smarter as it goes along. 

“Neural networks recognise patterns, pre-dict outcomes, and have other behaviour akin to living things,” Britton says. 

“SmartKargo uses the transaction data it gathers daily to improve business decisions and long range planning activity – what we now call Big Data.  

“For example, it can analyse specific flight and day of week passenger loads, then adjust available cargo capacity. This in turn reduces last-minute ramp offloads, improving both short-term service levels and long-term pricing and yield.” Any of this data can also - at the carrier’s discretion - be made available to other partners in the chain (a GSA or handler, for example).

Data of this kind has enabled existing SmartKargo customers to get between one and three per cent higher yields and between two to four per cent higher tonnage, while flown as booked has increased from three to five per cent. 

Customers include Norwegian, Cebu Pacific, Air Costa, Vistara, SpiceJet, GoAir and Hawaiian (who go live in June 2015). There is an obvious lack of big names in this list, but Shelat says that both Cebu Pacific and Hawaiian have taken SmartKargo up a step, proving that it can handle a busy regional airline in the case of Cebu, while Hawaiian will add an airline handling containerised international, domestic and inter-island traffic.

Meanwhile, discussions are ongoing with a North American carrier “and all the majors too”. Shelat com-ments: “We probably talk to one or two airlines a month who are interested in our product, and with three quarters of airlines still on a system that is 20-25 years behind, there is a lot of potential.

”Bigger airlines are understandably looking for a track record in an IT provider, something SmartKargo feel Cebu and Hawaiian provide, but the company also has other credentials. Its chief executive, Milind Tavshikar, and two of its top executives are MIT graduates - a qualification not otherwise common in the air cargo industry, as Shelat points out - and it has brought in Des Vertannes, former IATA head of cargo, as an advisor. Shelat’s Jet Airways and American Airways experience is obviously also invaluable.

Meanwhile, Microsoft Azure is not just selling Cloud services to SmartKargo but has been involved in its development. “This is a new business area for them so they are very supportive,” Shelat says.

Perhaps the biggest barrier to overcome when trying to win new customers, however, is not in the boardroom but at ground level. 

“You have a warehouse guy who has been there for 35 years and has always processed air waybills in a certain way and does not want to switch to a new one,” Shelat says. “The top executives usually understand the benefits of our system but have a harder time getting their people to see them.

”SmartKargo’s pitch here is that its system is easy to learn, because it is browser-based and intuitive. “All is point and click, so anyone who can use a PC or phone can do it, which is important when staff turnover may be high or literacy an issue.

”It can also be accessed from a laptop or tablet anywhere there is wifi or internet access. A smartphone version, incorporating the full functionality of the main system, is under development. The system is also user-friendly in other ways, enabling people to set their own key performance indicators and metrics, and offering them all kinds of customisable tracking alerts.

Critically, in these times of tight investment budgets, SmartKargo does not require any upfront expenditure on hardware or software. There is an implementation fee, but airlines are then charged on a per transaction basis.

The implementation fee includes free regulatory updates for five years. 

SmartKargo is already designed to conform to IATA regulations and Shelat says that any other government rule changes or mandated requirements will automatically be included in it at no cost to airlines. If an airline needs a local regulatory change - for example to meet a new rule from the Philippines government - then that is also included automatically.

The fee also includes a certain number of free man hours, varying according to the size of the airline, for further customisation, for example if a carrier starts a new service or product.

Shelat says this is a significant benefit, citing an example of a customer that was charged $17,000 to add a new destination to their former IT system, and then a similar amount to remove it a few months later. “In our system that would have been just 12 man hours,” he says.