How digital processes are now starting to re-shape air cargo

INCREMENTAL forward steps towards digitalisation made by the air cargo industry are starting to pay off, observes Thelma Etim.

There is no doubt that, in many areas of its business, the airfreight industry is still grappling with the burden of paper airwaybills (AWBs), the accompanying pouch and old-generation ground handling operations, such as airside ramp transport and road feeder services, as well as so many other politically complex matters such as analogue Customs agencies.

It is not surprising that any digital changes embraced by carriers and others are already showing benefits. “The development and implementation of next-generation technologies, rapid advances in consumer technology, increasing the shift to cloud computing, the utilisation of internet of things (IoT), big data and machine learning (ML) to collect and analyse large amounts of data – are all currently transforming processes in the [airline] industry,” an expansive report by consultancy Frost and Sullivan observes.

It predicts the airline digitalisation market will earn more than US$35.42billion revenue by 2030 and also forecasts that globally, between 2021 and 2030, most carriers will turn to digital transformation. “Airlines are identifying the importance of adopting digital solutions to improve their operations and increase revenue,” the report insists.

It also recognises that many major carriers, especially mainline airlines, are still reliant on decades-old legacy mainframe systems. “Although these systems are reliable, they face challenges with scaling in terms of operational requirements and integration with next-generation technologies, such as ML and block-chain,” it adds.

It is clear that new disruptive technologies are already altering the way some air cargo businesses are now operating. Take, for example, disruptor CargoAi, which revealed on 21 September that general and express shipments may now be booked digitally on group carriers Lufthansa, Austrian, Brussels, Eurowings and SunExpress, after one of Europe’s largest airfreight carriers Lufthansa Cargo signed a letter of intent with the digital disruptor. The arrangement allows airfreight customers in the Netherlands, Italy and Spain to gain access to routes and capacity information on all Lufthansa Group airlines serving those countries.

All airlines of all sizes will need to embrace change

A two-to-three months pilot trial of the new service is currently being operated, during which CargoAi and Lufthansa Cargo can fine-tune their preparations ahead of a global go-live, says a statement. The Singapore-based digital disruptor already operates a daily-updated extensive cargo flights schedule listing that now encompasses 620 airlines and 3,023 airports around the world. Following the trial, Lufthansa Cargo and CargoAi plan to disseminate the CargoAi service across the airline’s entire global network.

Digital customer Ashwin Bhat, chief commercial officer at Lufthansa Cargo, emphasises the need to give customers a choice of booking channels. “The impressive success that CargoAi has demonstrated in just the four years since it was founded mirrors the innovation that we strive for within our company and industry,” he says. “Lufthansa Cargo was among the first to introduce e-bookings channels within the airfreight segment, and we [now] have large numbers of customers using the e-bookings functionality in three pilot countries. We will be listening with interest regarding the new software’s features and ‘user-friendliness and experience’.”

Matthieu Petot, chief executive of CargoAi, acknowledges the airfreight division has already pioneered innovation in its long history and now with [us] is moving ahead of the digital curve. “It is the first and only airline so far to enable forwarders to make use of our instant rate offer and booking confirmation functionalities,” he points out.

Some 5,000 freight forwarders – small, medium and large in 103 countries – are already utilising the marketplace section on its website, he insists.

“They can key-in their shipment preferences similar to booking passenger flights on Booking.com or Experian – and then compare offers ranging for general cargo, urgent freight, to pharmaceuticals and dangerous goods,” he outlines. “[Our site] asks a lot of questions to assist the booking [process]. You can also save your template,” Petot explained during an exclusive interview with aircargoeye.com.

To accommodate the forwarding industry, cloud-native CargoAi has created a simple API plug-in feature. “This shaves off the six months it usually takes for those [customers] who currently utilise a transportation management system (TMS) to finally be able to integrate their data with that of a carrier,” he says.

For the eventual digitalisation of the airfreight industry, all airlines of all sizes will need to embrace change from selecting disrupting platforms or engaging in an expansive long-term digital transformation such as the long-term business relationship IBS Software has with American Airlines Cargo (AA Cargo).

AA Cargo once managed and maintained more than 91 costly, separate internal IT systems. Ashok Rajan, head of cargo and logistics solutions at the software-as-a-service (SaaS) entity, notes: “Whilst these 90-odd systems served a need at that point in time, there was no means to maintain, manage [or synchronise] them.”

IBS’s iPartner Customer platform enables data exchange in real-time with freight forwarders, digital sales channels and other e-bookings platforms, thereby reducing the legacy costs of expensive internal IT integration infrastructure and messaging, says Rajan.

“[Generally] the air cargo business operates in silos, and systems operate in silos, so therefore our suite of products is an attempt to make digital communications seamless across all partners, and that is our overarching statement,” he underscores.

Roger Samways, vice-president of commercial at American Airlines Cargo, insists that the carrier is 100 per cent committed to driving operational excellence through digital transformation.

Elsewhere, remote-first, cloud-based disruptor Cargo.One recently invited Japan’s freight forwarders of all sizes to sign up free-of-charge to search and book in real-time the available air cargo capacity of all of its airline partners – initially ANA Cargo, Lufthansa Cargo and Finnair Cargo, a step which it describes as “seismic” in the company’s expansive Asia-Pacific digital roadmap.

Cargo.One noted at the time: “Among others, the freight forwarding industry has much to gain from re-imagining operations for the digital age. For example, digital bookings replace the [existing] slow, asynchronous communications and increase productivity with saved time and better access to supply.”

Moritz Claussen, founder and co-chief executive of Cargo.One, underlines: “Together with many of the most important air cargo airlines, we now offer every Japanese freight forwarder the chance to modernise [their] operations with easy and efficient online bookings. Japanese customers can expect [us] to help them rapidly raise their performance, strengthen competitiveness and enhance their digital customer experiences.”

In July, Ken Wakiya, executive vice-president of global cargo marketing and sales at ANA Cargo, underlined how launching the digital bookings channel in its home market is such a crucial progression in the carrier’s overall digital strategy – “accelerating it in the short and the mid-long term”.

Oliver T Neumann, co-founder and managing director of Cargo.One, says the company’s vision is to enable “every forwarder in the world” to access the platform and eventually benefit from the advantages of digital booking.

Consultancy Frost and Sullivan has illustrated the mammoth undertaking of digitalising the airline industry by segmenting carriers into five tiers. The first tier encompasses cargo carriers with a freighter fleet of more than 100 aircraft, whilst the fifth tier includes carriers with a fleet of fewer than 10 aircraft.

Caribbean Airlines, for example, has entered into agreements with both Freightos Group’s airfreight e-bookings platform WebCargo and CargoAi over the last two months, thereby demonstrating the range and size of carriers attracted to such external digital service providers. Caribbean operates some 600 weekly flights to 22 destinations in the Caribbean and in North and South America, utilising a fleet comprising B737-800 and ATR72-600 aircraft.

Marklan Moseley, general manager of cargo and new business at the Caribbean carrier, emphasises that the regional airline “is always looking for innovative ways to improve the customer experience and the way we do business.”

Camilo Garcia, global vice-president of business development at WebCargo, adds: “Over the last three years, digital air cargo adoption has taken off faster than we could imagine in response to pressures on the air cargo industry.” In particular, North America is now its fastest-growing market. “We expect this momentum to continue throughout 2022.”