Deciphering the Future of Air Cargo
The cargo industry has shown surprising growth over the otherwise difficult past couple of years, compared to any other aviation sector. Does the future look as promising as it is now? How do data and digital partnerships play into the future of air cargo industry?
One of the most sought-after speakers at various industry forums, Ashok Rajan, Senior Vice President and Head of Cargo & Logistics at IBS Software talks about this and much more.
Air cargo is here to stay and leading global airlines have affirmed their commitment to improving their cargo business. How do you visualize the future of air cargo?
The last 24 months have been tough for the world, but not for air cargo. The post-pandemic air cargo market has thrived. It enabled the movement of essentials like PPE kits and vaccines. E-Commerce sector survived on air cargo. Even passenger airlines stayed afloat by converting their aircraft into freighters and carrying cargo instead of people. This not only highlighted the importance of air cargo to consumers, but also changed the mindset of most airlines. They have now started looking at cargo as part of their bigger business plans.
In order to sustain the growth trajectory, the industry needs to evolve and move beyond conventional models. For example, air cargo was always a B2B business with limited, long-term contracts with customers and slow back-end operations. Now, it must evolve and be more of a logistics solution to make its presence known. Moreover, once this happens, the growth trajectory initiated during the pandemic can be maintained.
How do you see the market evolving from what it is presently today? How can air cargo businesses retain the higher level of strategic focus it has garnered through the pandemic?
As against earlier years, the required level of technological capability is available for the industry. Businesses need to move on from "survival digitalization", which limits the capabilities in the modern world. The trend is changing, with digital being viewed as a means to expand the business and is becoming core to the business strategy.
Air cargo is an extremely siloed industry, with multiple stakeholders/parties playing their part during transit. Hence, businesses need to influence partners to undertake digitization, in order to ensure end-to-end optimization of performance. Yet another challenge is the lack of standards. However, businesses must establish and nurture bilateral engagements and evolve those into standards.
'Making data work', - what opportunities exist for enterprises and how should they prepare for this?
While folks call data the new oil, which may sound cliché, for the air cargo industry, it indeed is true. I look at it from two perspectives:
Despite everything the air cargo does, the industry is highly commoditized, and business goes to the highest bidder. Therefore, to extract more value, data can play a significant role.
The second is efficiency. Cargo spends nearly 60% of its journey on the ground and the rest 40% on air, and yet, it is called air cargo, purely because of the time invested and for want of operational efficiencies.
Businesses must focus on improving their top and bottom lines. They must know where optimizations need to happen, and that is where the data can help. You need digital platforms that are set to capture the right data and give you actionable insights, not just information.
Today, most business processes rely on legacy and are reluctant to change. Businesses just need to continuously evolve all parts of a business process by taking advantage of the ecosystem of data and insights and making the processes agile to make a difference.
Digital partnerships – what do they mean for the industry in terms of growth?
As cited earlier, the air cargo industry is highly siloed. When something is moved across ten partners to reach a destination, the efficiency of the process is only as strong as its weakest link. In such industries, partnerships play a significant role and one of the biggest enablers for bridging these partnerships is digital.
There are primarily three forms of collaboration that happens across this industry.
- Airline-Customer
- Airlines-Ground Handlers
- Airlines-Airlines
We at IBS Software strive hard to ensure seamless connectivity for airlines with their customers and ground handlers. We have a clear vision – one big digital ecosystem for airfreight. Our air cargo software and collaboration platforms allows airlines to engage with ground handlers and ensure seamless service delivery, allow unprecedented reach for sales through connectivity to digital channels, and also to enable true collaboration and joint ventures on the cargo side, a model very common on the passenger side.
How can air cargo businesses retain the higher level of strategic focus it has garnered through the pandemic?
The supply chain and logistics is a massive industry and is ailing with multiple "growth pains". Hence, there is a need for businesses to move from being a transporter to becoming supply-chain enablers, by focusing on two key focus areas:
Ensure you are extracting the correct value by listening to the customers and providing products/solutions tailored to their needs. For many of the customers logistics is key to their own services and therefore would be willing to offer greater value for the right product offering and more importantly timely transport.
The next involves "delivery excellence", – wherein you ensure that the cargo moves at speed with minimal interruptions.
We believe that the industry, in some form, needs to evolve beyond being an airport-to -airport industry. Again, it is a long-term viewpoint; the short/medium view involves protecting the increased yields over the last two years and ensuring that the airlines offer proper solutions to their customers. At the same time, continuous investment in the right digital platform as is imperative, since it would become a huge differentiator between the players unless the industry evolves.