Technology helps level the playing field by making it easier for small freight forwarders to handle larger volumes of traffic and the associated document work.
Eyebrows went up and chins wagged in February upon the news that Flexport, a technology-based forwarder launched in 2013, had garnered US$1 billion in funding from a group of international investors. Industry pundits have questioned the wisdom of this move, arguing that the San Francisco-based forwarder, which reported US$500 million revenues for 2018, has been less disruptive and formidable in its performance than touted. Still, the image of a tech-based start-up shaking up an industry regarded as slow in embracing technology has a powerful appeal to investors.
Without question technology is becoming harder to ignore. Brian Bourke, vice-president of marketing at SEKO Logistics, sees a quantum change in the business. “Our airfreight volumes are increasingly driven and facilitated by our technology,” he says. “What’s driving cargo is technology in freight and e-commerce.”
Traditionally airfreight was controlled by the shipper, but the rise of e-commerce has shifted the control to the consumer, Bourke argues. “We’re still moving cargo as a traditional forwarder, but more and more a consumer is linked to the shipment. This is about building better solutions to serve that consumer. It’s not driven by traditional cargo sales,” he says.
Elliott Paige, director of air service development at Atlanta’s Hartfield Jackson International Airport, also feels the pull from this dynamic. “Serving consumers today is driven by the need for speed. We have to adjust to that,” he remarks.
For SEKO that target market has expanded to new players. Since last November the logistics firm has increasingly targeted providers of e-commerce technology solutions. It has made deals with companies like ShipStation and Easyship, which provide cloud-based shipping software to online merchants. Instead of integrating lots of such merchants one by one with its system, SEKO gains access to them through the software providers.
On the carrier-facing side, technology providers and portals are also becoming more relevant for forwarders. Technology helps level the playing field by making it easier for small operators to handle larger volumes of traffic and the associated document work, remarks Jeff Cullen, CEO of Rodair.
CargoiQ, which measures airline performance through a set of defined milestones for a shipment, recently completed trials for a solution for small and mid-sized firms that gives them a route map and status updates.
“We provide a turn-key solution for independent freight forwarders to benefit from shipment planning and control through shared Route Maps and operational visibility for various milestones along the shipment lifecycle,” states Chris Davies, manager product and technology.
Increasingly forwarders also look to platforms that offer pricing information and booking capability. One of these, Cargo.one, announced in March that more than 150 forwarders have signed up to use its site, and the number of airlines that are making their capacity and rates accessible through the portal is also rising.
Airline rates are moving online, both through rate portals and carriers’ websites. A growing number of airlines, including Lufthansa, Delta and American, have automated quotes and booking functionality on their websites.
Rodair has embraced this for regular traffic, says Cullen. “It has helped the airlines reduce cost and head count. As for the volume we can put through today, we can do a lot more with a lower head count.”
Lufthansa has made it clear that pricing transparency and better connectivity to its clientele are key factors for its business and pledged further steps to make content accessible to its customers. At the same time the airline has been at the forefront of the push for the replacement of paper documents with electronic data transfer channels. The main focus of this drive, which the International Air Transport Association (IATA) has championed with its ‘e-Freight’ initiative, has been the adoption of the electronic air waybill (e-AWB).
Last year, Lufthansa started charging forwarders in markets that are fully e-AWB enabled for handling paper air waybills. According to the airline, this has been a major reason for its e-AWB penetration reaching almost 74 per cent in February, up from nearly 60 per cent last March and 40 per cent in January of 2017. The current industry average is around 61 per cent. Lufthansa aims for 80 per cent by the end of this year.
Tag and ship
Improved shipment visibility is one of the main objectives in the deployment of technology on the airline side. Trials with Bluetooth technology promise a significant step forward in this arena. Cathay Pacific and Delta have been at the forefront of this, trialing Bluetooth low energy tags with containers for real-time visibility throughout the journey, including the airborne part, which has so far been a black hole, owing to requirements to shut off transmitters during flight lest they interfere with navigation systems.
By February Delta had tagged about 70 per cent of its container fleet and installed readers in 115 locations. “Our goal is to get near 100 percent,” says Shawn Cole, vice-president of cargo.
Beyond seamless tracking in real time, this promises uninterrupted visibility of vital shipment conditions, such as monitoring temperature and humidity of climate-sensitive shipments. At this point the airlines have run trials to monitor just container movements, but adding sensors to keep track of temperature is on Cole’s agenda. “A lot of pharma shipments want that,” he says.
He likens the state of play with this technology to the early days of mobile phones compared to today.
There is broad agreement that the air cargo industry has some way to go with adoption of technology. “There’s still a lot of work to be done. This industry is still very cumbersome and disconnected,” remarks Cullen. As Rodair is preparing for its integration with the Rhenus group (following the announcement of the takeover agreement in mid-March), he is looking forward to getting access to some of the tools in the new parent’s arsenal, such as voice-activated picking.
Tim Strauss, vice-president, cargo with Air Canada, compares the air cargo sector to a start-up. On the passenger side of the business tremendous tools have been developed over the past two decades, but very little has happened in cargo,” he says.
For a change Air Canada’s cargo division is leading the charge on one front, ahead of the passenger department. It is among the first batch of companies involved in ‘SCALE AI’, a supercluster supported by the federal government that aims to “build the next-generation supply chain and boost industry performance by leveraging artificial intelligence technology.”
Strauss says that some 43 areas for machine learning have been identified for Air Canada so far, adding that there will likely be more down the road. “We’re just at the toe in the water stage,” he remarks.
He says Air Canada is looking to leverage artificial intelligence for better capacity management. One area of interest here is use of data on weather patterns. For the perishables business, a growing part of the airline’s traffic, this can make a huge difference—from severe weather conditions disrupting fishing to cherry crops being ruined by rain at a vulnerable time. AI may help alert Air Canada that bad weather will likely result in only 30 per cent of the planned lobster exports being loaded on a given day and help identify alternative loads to compensate.
No shows, a perennial headache for airlines, is another possible target for AI. Using data on customers’ no show records can help identify possible empty positions and lead to different capacity management decisions. Strauss is quick to stress that AI does not make the decisions. It is a tool for staff to enable them to make better informed decisions and spend less time poring over data. “At the end of the day it’s about your front line staff—in sales, in operations—having better tools,” he says.
Jens Tubbesing, CEO of GSA Airline Network Services, reckons that the emphasis on complex systems is sometimes misplaced. Often relatively simple technology can go a long way, he says.
“Sometimes a guy takes a picture with a mobile phone in a warehouse and sends that. That can get to me faster and tell me more than some systems. Mobile technology allows you to do things that you don’t need major applications to do. What most people are concerned about is: Is my cargo there? Has it been picked up?”
In any case, connectivity is set to play a larger role in logistics. Even airport authorities, which are not directly involved in the flow of cargo, are beginning to see a need for network connectivity. Following the severe congestion during the 2017 peak season, which paralyzed both airside and landside operations, some European airports took steps to manage truck access to their cargo areas through electronic channels. The concept is also gaining traction in North America, where airport authorities have traditionally contented themselves with a pure landlord role.
For Paige at Atlanta Hartfield, the biggest priority this year is to set up a cargo community system that can serve as a platform for the various stakeholders to communicate electronically. Paige’s colleague John Ackerman, executive vice-president, global strategy and development, is also thinking of ways to improve data flows between the various parties involved in air cargo on his doorstep. “An airport can play a much more active role than we were doing in the past,” he thinks. “There are some structural things that only an airport can address.”