Airline Cargo

Air cargo witnessed a sudden boom during the pandemic, becoming a revenue lifeline for airlines as they shifted their focus from passenger traffic to cargo. Throughout the IBS Cargo Forum 2021, we touched on many of the new and long-standing challenges and opportunities across the industry, and how to keep air cargo in the boardroom moving forward.

During our final session on Wednesday, we explored different topics around "expanding growth in air cargo". I was thrilled to moderate a panel on the topic with Niall van der Vouw from Clive, Markus Flacke from Volga-Dnepr Group, and David Sauv from IATA. How to make the best use of data across the supply chain was central to our discussion.

Kicking-off with McKinsey's concept of the "insights value chain", it's clear that data will be key to improving air cargo processes and its sustained growth. But the data advantage if more than the sum of its parts. Data's value and contribution are multiplicative if key elements are fulfilled. How? It's about transforming data into applied intelligence across an organization, its people, and its processes. It's also about broadening the scope and sharing real-time information with supply chain partners and enabling more upstream and downstream integration. Simply adding data into a system is fruitless if it can't be transformed into actionable intelligence across stakeholders.

Three keys to achieving data's multiplier effect 

The air cargo industry sits on top of a massive amount of data. But that data has largely remained latent and very fragmented given our industry's structure and what is a predominantly legacy technology landscape. Achieving the data multiplier effect across air cargo hinges on three keys:

• A more collaborative mindset to data-sharing across supply chains
• Evolving messaging standards for data-sharing integrity, and
• A common technology platform across partners.

Many companies have reassessed their organizations, processes, and technology during the pandemic. While we ride the wave of success, it's no secret that air cargo is expected to return to pre-pandemic levels as the world eventually recovers. Yet the pandemic has revealed how much remains to be done to improve industry processes and turn back the tide of commoditization that was setting in. Supply chain partners need to be ready to differentiate their business offerings as over-capacity eventually returns so they can compete on quality of service and reliability, not just price. There's a huge opportunity for air cargo, and now is the time to act.

Agile and partner-integrated supply chains 

While industry standards are important to driving efficiencies, the current pace of technological development outstrips the industry's ability to wait. Reliable and flexible supply chains are critical to fulfilling service level agreements. Innovation in products, services, and business models are just as critical to unlocking new value across stakeholders.

Within this context, organizations are partnering to create end-to-end supply chains and test and learn from new technologies, practices, and processes. It's now more important than ever to have an open and agile technological backbone to tie into emerging business and partnership models. Hence, the growing need for a flexible cargo platform that can facilitate seamless integration and intelligence-driven collaboration across air cargo players.

Sustaining current revenue levels 

My colleague, Anish Tharakan, addressed the current limitations to deploying modern retailing and pricing techniques in air cargo. While merchandising isn't necessarily new to the industry, its full potential has yet to be unleashed by reducing its dependency on human intervention in favor of a more digital, automated, and proactive approach. This will be instrumental as air cargo capacity returns to pre-pandemic levels. He explained how IBS Software's cargo solutions enable more flexible pricing and offer personalization so cargo stakeholders can better differentiate and promote their offers and boost upsell and cross-sell conversion.

Building on this backdrop, Ajith Pancily, explained how our cargo platform is evolving to sustain our customers' current revenue opportunities and enable end-to-end supply chains that can seamlessly integrate partners. In addition to the trends already driving air cargo commoditization and a plateau in yields, he identified four new trends reinforcing the need for a new approach:

• The emergence of non-traditional players in the air cargo supply chain
• Changing expectations regarding transparency, reliability, consistency, and shorter delivery times
• Increasing logistical modal shifts as lower cost alternatives return, and
• The rise of comparison shopping and ease of business transfer.

To counter these trends, he highlighted key steps air cargo stakeholders should undertake to prepare and thrive in the new digital era by:  

• Building value propositions that directly address value chain expectations
• Exploring untapped upstream and downstream integration opportunities beyond airport-to-airport activities, and
• Laying flexible technology foundations to capture a greater share of shippers' wallets.

Unlocking innovation potential will be key to sustaining the air cargo's current revenue levels. To do so, we'll need to overcome our fragmented landscape through closer collaboration and integration of industry stakeholders. Data-sharing and transparency hold the key to a digital culture by default for air cargo and to fulfil service level agreements across end-to-end supply chains. The glue that will hold it all together is a common partner platform.  

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