Point of View

Significance of Data & Analytics in Airline Cargo Management


Data and analytics have opened avenues for more efficient business operations and digital innovations. This allows businesses to identify and prepare for future contingencies by understanding customer preferences and market trends. Padmaja, Lead Product Manager - Cargo & Logistics Solutions at IBS Software, discusses how data is being used in the air freight industry and the challenges in adopting data analytics, as well as what the future holds. 

1. In this era of Digitalization, data & analytics play a vital role in digital transformation. How do you envisage these technologies embracing Air Cargo, and how could it benefit the airlines?

The air cargo industry has unique business model. From a long time, it has been an enabler of the global economy, and the most preferred way to transport goods. According to the Industry statistics, the industry is responsible for over 35% (approx.) of International trade by value.

While the industry did experience an impact because of the pandemic, things are picking up again. The industry is set to grow at an unprecedented pace. It is expected that the industry will be valued at $376 billion by 2025, growing at a CAGR of 5.6%.

Unsurprisingly, every major and minor player in the industry is doing their best to secure their chunk of the $376 billion pie, and the pace of digitization is emerging as a deciding factor.

Data and analytics are the primary driver of digital transformation, which allows combining data from different sources and systems to see the big picture. Analytics adds unique value in decision making by turning raw data into useful insights. Analytics also has sense-and-respond capabilities, which would enable digital innovation and transformation

According to Gartner, more than 75% of companies are investing or planning to invest in big data within the next few years. Real benefits of analytics is its ability to combine historical and real-time data with statistical analysis to search for key patterns, draw inferences and make predictions about the future. The Air Cargo industry has witnessed robust growth over the years, while at the same time; industry is facing several potential risks to its growth due to poor visibility across the entire value chain, limited data-driven decision. Analytics creates an excellent opportunity for air cargo carriers to get ahead of the curve by leveraging real-time air cargo market analytics across different business activities

Every business is trying to get more insights, as data-backed insights translate into a competitive advantage and proactive decision-making. Data and analytics are major enablers. Being fully digital is a beneficial undertaking for any air cargo carrier. It enables end-to-end visibility and data availability for achieving operational excellence. Not to forget, data and insights, when used correctly, also lend businesses better yield and more efficiency.

The use of data can differentiate cargo airlines and help create specialized offerings targeted at niche markets, serving specific needs. In other words, data and analytics can help cargo companies identify market gaps and emerge as specialized players catering to a specific section of the market.

2. What could be the challenges of implementing analytics, especially in a dynamic market like Air Cargo?

Few of challenges include

  • Availability of data :
    Data is the backbone for any analytics based platforms. However, availability of quality data is one of the hindering challenge on the slow pace of adaption of analytics based decision support in Air Cargo. Different versions of data across different systems also add more challenges
  • Absence of data-driven business models
    Opportunity of enabling a data driven decision for proactive and informed decision making is plenty. However, its almost at very early stage that airlines still uses data insights for reactive nature of reporting rather than proactive and embedded decision support
  • Disconnect in business environment :
    There is disconnect between the systems in the business landscape. Systems and processes that do not correctly communicate with each other. This means that even if several aspects of a process are digitized, they probably have to work in alignment with traditional processes, preventing airfreight companies from enjoying the benefits of digitization and data analytics.
    A similar disconnect can also be observed between different stakeholders. For example, most cargo airlines collaborate with multiple partners like airports, ground-handling companies, and sometimes-other airlines. However, many of these players are yet to undergo digitization.
  • Technology Adoption:
    Designing dynamic business models rely heavily on technology. However, the pace at which data-powered technologies are being adopted by cargo airlines is surely a challenge. Fortunately, we have reached a stage where we have the technology to overcome these challenges and build transparency between partners, systems, and processes.

3. What, according to you, would be the most relevant application of Analytics in immediate focus that could completely change Air Cargo's outlook?

Different analytics applications power any air cargo business; The most important application of analytics right now is on Revenue Management for optimizing revenue and strategic planning.

Revenue management concepts and use cases built around analytics include forecasting and dynamic pricing. Currently, the lack of visibility of how the market behaves makes it difficult for airlines to adapt. However, with forecasting, airlines can accurately predict demand and take steps to be in a better position to adapt to future situations. This will subsequently lead to improvements in yield, revenue and strategic positioning.

The other application, dynamic pricing, can potentially bring about a disruptive change in the industry. Currently, most air cargo airlines update their prices few annually. However, the cargo market being very dynamic, and just like with passenger line of business, customers expect the freight charges to reflect this dynamic nature of the industry. In addition, the market's demand is for proactive businesses, and dynamic pricingperhaps the most elementary feature required to meet that. .

4. In order to enable data-driven decision-making, how should the airline prepare?

Preparatory steps for creating a data driven decision making can be classified into two : one of the individual businesses operating within the industry and the other of the industry as a whole.

In the case of businesses, the core enabler here has to be a data-driven business model. For that, companies need to be equipped to make data-driven decisions. They must reconsider how they use data and the purpose it serves in their business strategy. When businesses are equipped to use it correctly, data will enable proactive decision-making, helping businesses evolve from their current reactive way of doing business. In addition, predictions using data and businesses can better prepare themselves to adapt and survive future potential. In other words, air cargo businesses must focus on building integrated business processes that are supportive and accommodative.

The other point of view is that of the infrastructure. In order to fully realize the benefits of digitization, businesses must have access to the right IT environment and platforms as well as an integrated working model. It collects the most relevant and consequential data, translates it into actionable insights, and enables truly informed decision-making.

5. How do you envisage the digital transformation journey ahead in Air Cargo?

Incorporating data and analytics into business strategy is quickly moving from a luxury to a necessity. The industry should focus on identifying what "right data" constitutes and how it can be used to derive insights that enable better decision-making. The future is expected to be full of disruptions, and air cargo businesses must be prepared to respond and adapt quickly.

Digital transformation is expected to lead to a more proactive way of doing business in the immediate future. From a business strategy perspective, data and analytics are expected to be the driving force behind any digital transformation initiatives. As stakeholders embrace digitization, integrated working models will be built to reap the real business out of digitization. In addition, integrating advanced technologies like artificial intelligence (AI) and machine learning will leverage air cargo businesses the strength to adapt proactive and informed decisions.

As Jim Bergeson says, "Data will talk to you if you are willing to Listen" . Let us have the right data and right platforms ready to enable data-driven business models. 


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