Need for speed: Shippers want the air cargo industry to move more quickly
30 / 10 / 2018
The chairman of the Global Shippers’ Forum (GSF) has called on the air cargo industry to strive for faster supply chains in order to make the most of the opportunity presented by e-commerce.
Sean van Dort took up the role of GSF chairman in May. He followed in the footsteps of Bob Ballantyne, chief executive of the Freight Management Association of Canada, who had chaired the organisation since its incorporation in 2011.
Van Dort is director of logistics and digital services integration for MAS Capital, a major apparel manufacturer based in Colombo, Sri Lanka, and he has been a member of the GSF board since 2015. Until recently, he was chairman of the Sri Lankan Shippers’ Council.
He has taken up the role as the industry faces several challenges, some of which are particularly pertinent to the Asia region where van Dort is based.
He says that two of his major priorities are helping members understand the impact of Brexit and working with the air cargo sector to ensure it can meet the needs of business-to-consumer e-commerce.
On e-commerce, van Dort is keen to emphasise the need for speed.
He says that the GSF would like to see faster implementation of digitisation and trusted trader schemes in order to create supply chain efficiencies. To this end, it is campaigning through its member associations to put pressure on governments, trade groups, customs organisations and the overall air cargo industry.
He adds that the growing number of protectionist measures being introduced by governments is also a concern for the organisation as they restrict the flow of goods across borders.
Van Dort points out that the G20 group of nations introduced 39 new protectionist measures between October last year and May this year.
Keeping the customer close
One way to speed up supply chains is to keep inventory close to the final consumer. Van Dort says that with this in mind, companies traditionally utilise warehouses in destination countries in order to deliver items as quickly as possible.
However, he feels that running facilities at destination adds cost to the supply chain. Goods can be stored more economically in origin countries and quickly flown to destination when required, he suggests.
This would also result in a lower liability for companies as they could ship as and when they need to, rather than invest in large amounts of costly inventory that they may not sell. However, in order to make this type of supply chain setup a success, trade must be allowed to flow freely.
“Speed is the most important thing today and the younger generation, who will be the biggest buying power in the next 10 years, do not want to sit there and wait for their product,” says van Dort. “They want to see it yesterday.
“We are working with the World Trade Organization (WTO) and the World Customs Organization (WCO) to ensure that greater freedom and data security is available to complete any risk awareness and to ensure the smooth flow of merchandise.”
However, the challenge is not just at a governmental level, says van Dort. Individual companies need to move away from paper transactions and increase their use of digital services.
“Demand is growing, but as fast as the demand is growing, the digitialisation of air cargo has to happen even faster.
“There has been some progress in the digitisation of electronic air waybills (e-AWB) but most other documents are still manual, especially coming out of Asia.
“Digitalisation creates greater security for the product, for the receiver and for the respective government, allowing them to carry out their risk awareness programmes and bring some settlement to this chaos that is happening.”
Van Dort says the slow progress on digitalisation is partly down to traditional banking systems that still require paper documents, such as letters of credit, although he adds that banks are increasingly introducing digital services.
Another reason for the lack of momentum, he says, is that in certain parts of the world manual labour is less expensive than the implementation of software.
Van Dort feels that digitalisation and the development of trusted trader programmes, where companies that meet certain criteria are able to benefit from an expedited customs process because they are viewed as lower risk, could also help solve the current congestion issues faced by shippers at some major hubs.
“If the documentation is slow, that means there is stagnant cargo in warehouses at the airports,” he says.
“Trusted trader programmes must be established around the world to mitigate risks and concerns about terrorism, narcotics etc. The trusted trader registration process will have to be embraced.”
The Brexit effect
Another challenge van Dort has faced in his first few months as GSF chairman is Brexit. Many of the organisation’s members are based in Asia and have strong trading relationships with the UK.
Overall, he says that he does not expect Brexit to have too much of an impact on trade, but he adds that the GSF has been working to reassure members that they will still be able to trade with the country once it has left the European Union on March 29 next year.
Says van Dort: “There is no clear indication coming out of Britain itself assuring the manufacturers and the exporters in Asia that it will be business as usual [once the UK leaves the European Union].
“Brexit has created a lot of doubt in the world but I don’t see it impacting greatly the shipper out of Asia and the consumer in Britain because bilateral agreements can always be created and Britain will still be able to trade with the rest of the world.”
Van Dort says the GSF also has plans to expand its membership. At the moment, members are made up of national shipper organisations.
However, in the future, sectoral organisations could also be approached to join.
“I think if you really look at the future, it is my opinion that we should look at getting product associations, not just shipping associations, who are in their own right very strong and very opinionated and can contribute to ensure we can get the best out of the GSF and the authorities.”
For his final comments, van Dort again emphasises the need to speed up supply chains: “The game here is speed. The world is getting smaller and the consumer is becoming ever more demanding. They want it yesterday, so the only way forward is to go digital and to go as fast as possible to the end consumer. That is my opinion.”