3 focus areas for air cargo to empower e-commerce - Part 2
In the previous part of this blog post series, we had considered the symbiotic relationship between air cargo and e-commerce. A key observation was that instead of pushing for full consolidation, the more practical solution should involve a significant effort invested in creating highly customized cargo products that enable e-commerce companies to improve the value proposition they provide to their customers. The first focus area had also been explored. Here we continue with the rest of the focus areas which will help air cargo to align better with e-commerce players and their requirements.
2. Physical integrity of the supply chain
Social media spreads news at a rapid pace, and we still don't have effective mechanisms to test the veracity of claims before they are conveyed all around the globe by malicious or unsuspecting agents. So when a customer says that an e-commerce company cheated him/her by delivering the wrong goods, fake goods, or even dummy goods, a large part of the company's target population comes to know even before the company comes to realize the problem, let alone think of any damage control measures. Hence the safest bet is to put in place reliable measures to prevent theft or accidental leakages from the supply chain, or rather to ensure integrity of the supply chain.
Conventionally, any cargo supply chain is greatly fragmented in terms of ownership and this makes a comprehensive source to destination tracking mechanism unviable to implement for all the cargo handled. However, e-commerce companies have a certain special interest in ensuring that their customers have an elevated quality of experience. Offering a special, dedicated high security channel with at-source verification of goods, video monitoring of warehouse lanes and verification of volume/weight metrics, verified delivery acceptance, etc. would provide a greater level of alignment to the e-commerce company's requirements.
For example, no customer would have to complain about having received a brick instead of a mobile phone if there is constant monitoring of the package for any physical changes happening to it from source to destination. A marked change in weight or other physical dimensions of the package would immediately signify either damage or tampering. This would be a dual value addition to e-commerce companies, first ensuring the contents of the package sent to the buyer is exactly what he/she purchased, and then on the return path to ensure no fraudulent replacements happen.
3. Data-centricity across the chain
Once a package leaves the e-commerce company warehouse, they are entirely dependent on the logistics partners to ensure trackability and transparency across the chain. While initial sales data can be tracked by the seller through their e-commerce platform, any additional data capture they require will have to be facilitated by the partners including the air cargo provider. This includes continuous shipment monitoring (for sensitive goods) as well as logistical parameters such as loss patterns, speed of delivery, last mile engagement, etc. which are valuable inputs towards designing future customer experience. This calls for either a totally centralized ownership of the data, or to have a decentralized approach which is fortified by a blockchain to ensure data integrity.
Timely, accurate data can provide several valuable insights about the handling of the goods at each point on the supply chain, enabling meaningful action towards reducing revenue leakage. Why do certain kinds of goods always suffer damage? Are some areas more prone to missing packages than others? Such questions can be easily answered by ensuring there is a mechanism for data capture through the chain, as part of the cargo product designed specifically for e-commerce.
Conclusion: Focus on the present, keep an eye on the future
To be perfectly realistic, a total consolidation of the entire e-commerce and air cargo supply chains is not feasible in the present for many reasons. For one, elimination of intermediaries seems to be an attractive proposition for the elite links in the chain, but that would adversely affect the economics of coverage if not handled properly. Stiff resistance from these at-risk links would also pose practical problems in the implementation of any such system which attempts to do so. Also, smaller e-commerce players (who deal in small volumes and/or niche goods exclusively) will not have the muscle of the world leading retailers to exercise complete control over a consolidated chain. Therefore it makes sense to look at feasible customizations.
Yet, while we invest significant money, time and effort into strengthening the contemporary supply chain of air cargo for e-commerce, there is no denying that strikingly disruptive changes are close at hand. For example, drones may be soon put into commercial use as last mile delivery agents if the regulatory issues can be cleared up and there is sufficient mapping of all regions of e-commerce coverage. Self-driving vehicles may act as portable pick up points, handing over packages to customers in each neighbourhood who authenticate their eligibility using smart cards or biometrics.
In fact, the whole paradigm of transportation of goods may be replaced by merely sending electronic soft copies of designs which may be 3D printed at a local agency based on each customer's demands. The files may be encrypted to ensure only authorized recipients have access. But until then, this multi trillion dollar e-commerce industry has a lot to contribute to the world economy and it is up to the air cargo community to empower it for realizing its potential!
Ashok Rajan is Senior Vice President & Head of Airline Cargo Services line of business at IBS. An accomplished specialist in the Travel & Transportation domain, he has a track record of 18+ years in conceptualizing and building products for the industry. Having played multiple roles in the organization from development to product management to running transition programs for customers, Ashok is involved with building and executing the strategy for the flag-ship iCargo product line of the company.