Air cargo industry needs to prepare for big data or face losing out to rivals and disruptors

05 / 10 / 2016

  • Big data debate at the Frankfurt Air Cargo Innovation Lab conference. Picture: Tim Wegner

Big data and digitisation are two of the big topics that the air cargo industry is currently grappling with.

While the air cargo industry has been moving increasingly into the digital world over recent years, it is often accused of being too slow in adopting new technologies that can automate the exchange of information between the various players in the supply chain, which creates efficiencies and speeds up the handling of cargo.

Participants at the Frankfurt Air Cargo Innovation Lab suggested that companies which fail to speed up their adoption of digital processes could lose out to rivals that do develop their offerings and even outside disruptors that currently do not even offer air cargo services.

One area of improvement identified by the speakers was the level of visibility of shipments that the air cargo industry should provide to customers.

IATA head of cargo transformation programme Celine Hourcade said: “Transparency will be key because today you can buy shoes for $50 online and as soon as you click the button you are notified and you know exactly what is happening to your package and when your order will be delivered.

“The same person buying a $1m service to transport the goods doesn't have the same transparency and visibility on what is happening to the shipment, what is happening to the order.

“We have absolutely no choice and by we, it's this industry, the airline, the freight forwarders, the handlers, we all have to work in that direction.

“Does it mean we will all be sitting at the same place? I don't think so. Does it mean that some people will lose? Yes, some people will lose.”

Ericsson strategy development manager Robert Mellin said increased transparency was important to shippers as it allowed them to improve planning.

He explained increased transparency would allow companies to reduce the need for buffer stock, which would in turn reduce the cost of the supply chain.

Senior vice president UAE of cargo handler dnata, Bernd Struck, agreed that transparency was important but warned that sometimes companies can demand too much information for the sake of it.

“I look at the service level agreement (SLA) requirements of a number of airlines to a service provider where I need to report and I need to be transparent on 50 different items which are not measurable. I ask myself what are we doing?

“We need to agree on basic key performance indicators, which are measurable in real time and where the customer can see online how we have been performing.”

This view was echoed by Ulrich Wrage, chief executive of supply chain community software developer Dakosy, who said that handling agents are expected to sign SLAs with airlines to ensure goods are ready for carriage four hours after the aircraft has touched down, but then the pallets sit in a warehouse for two days as they are not yet needed.

As well as helping win new business, data could also help air cargo companies reduce their own costs by taking waste out of their own processes, the speakers said.

Struck said that dnata hoped to improve its capacity by 20%-25% by analysing data to create more efficient operations.

“We believe that we can accelerate the overall dwell and handling times in our business in order to get our customers, the airlines and freight forwarders, the benefit of a seamless product offering.

“We believe that we need to integrate much more with the security authorities and customs authorities in that process and we will be doing that with the UAE in due course.”

Data sharing across the supply chain partners was also another area for improvement, with it suggested that cloud based systems could be used to reduce data input resource and make it easier for companies to access information.

However, Hourcade said that one of the challenges faced when creating cloud-based systems was companies’ concerns that they could be giving away valuable information.

She said: “I think we have much more to gain on the airline side or with the partners by removing paper work and for me this smart data sharing is extremely important.

“We have no choice; we need to move to that. We have extensive discussions all the time in this industry on 'yeah, but this is my data, I don't want to share’.

“Everybody needs to own their own data but also needs to share the data when it's necessary.

“So those smart data sharing platforms, the community platforms are really important to make the whole process very smooth and transparent.

“I think it will be tremendous gains for the airlines in terms of cost reductions, in terms of efficiencies, know better how it works internally, know better how it works with your partners, know better what are the trends with your customers, to better serve them and anticipate their needs.”

Mellin also moved to reassure airlines that shippers did not want access to data in order to try and negotiate better rates because the cost of air transport was just a small part of the overall cost of the supply chain. Instead, he hoped increased data access would help remove inefficiency.