Even before Covid-19 infected the world, the extraordinary growth in e-commerce was putting pressure on the supply chain for ever-faster deliveries. But the pandemic hasn’t done much to dampen demand. If anything, it’s given it a boost.
Recent forecasts bear this out: The IMARC Group expects the global e-commerce market to continue its double-digit growth for the next five years, and FTI Consulting expects online retail sales to rise to $1.35 trillion by 2030. That’s a 125% increase since 2019.
Great news for the global courier, express and parcel market. But not if it can’t keep up with demand. To do that, it needs to move cargo more quickly and more efficiently than ever before.
Let’s looks at six ways this market—and the air cargo industry as a whole—could become much more efficient.
How can we boost efficiency in the air freight industry?
Despite the continuing presence of Covid-19, the outlook for the air cargo industry is undoubtedly much brighter than just a few weeks ago. Passenger airlines are starting to get back on track, bringing with them much needed additional cargo space. Air freights are dropping from almost ridiculous highs, and e-commerce sales are set to soar.
But the pandemic has done more than wipe out belly cargo capacity and put stock levels of Unit Load Devices under increasing pressure. It’s also shone a light on the many efficiency gaps in the movement of air cargo.
So, perhaps now is the time to coordinate our efforts to accelerate the numerous efficiency initiatives currently underway in our industry. In particular:
- Cargo-friendly airports
- Digitalisation of processes
- Airport Cargo Community Systems
- Digital air corridors
- Enhanced ULD management system
- Efficient ULDs
Perhaps top of the list of efficiency improvements for the air cargo industry are cargo-friendly airports. What do these look like? Well, you’re best off avoiding a major airport and heading instead to a second-tier airport like Rickenbacker International Airport outside Columbus, Ohio, according to Eric Kulisch in his article ‘Cargo-friendly airports shine during COVID crisis’.
Rickenbacker exemplifies the cargo-centric approach. The way it’s set up helps accelerate loading and unloading from freighters. Airlines can even handle the cargo themselves if they wish. Several freight forwarders have air-side cargo terminals, which gives them direct control over their freight.
Freight carriers and logistic companies love the efficient set-up here, and no wonder. Evan Rosen, President of the Americas for Expo Freight Logistics, explains to Kulisch that his company can unload freight at Rickenbacker between two to four days faster than at his airline’s container freight stations at Chicago or JFK. That’s a staggering difference.
Bryan Schreiber, Manager of Air Cargo Business Development at Rickenbecker describes how the crisis has generated new business as freight companies scramble to non-congested airports. “We are seeing some large global freight forwarders that haven’t used Rickenbacker in a gigantic way now chartering whole aircraft into Columbus because they’re finding it easier to get the freight on the road to final destinations.”
A cargo-friendly airport should have good infrastructure, customer service, longer operating hours, and priority clearance from customs authorities
Other shining examples of cargo-friendly airports include Rockford International Airport (near Chicago, USA), East Midlands Airport (near Birmingham, GB) and Kaunus Airport in Lithuania. Logistic handlers are finding these airports to be much more efficient than their larger cousins, who focus heavily on passenger airlines and don’t have a logistical speed advantage.
Digitalisation and the need to be extra resourceful
The air cargo industry is full of manual processes. Not terribly efficient, but doable if you have enough people. However, when a global health crisis hits and forces you to reduce staffing levels around the globe, either temporarily or permanently, you know those labour-intensive processes have had their day.
Henk Mulder, Head of Digital Cargo at the IATA, explains it like this to Thelma Etim of Air Cargo Eye: “Resource efficiency is the first and number one requirement. All of our companies are resource constrained right now. We have real issues making ends meet.”
Mulder’s answer is digitalisation. In other words, he wants to retire anything in the air freight industry that requires manual data operations and then to share all data throughout the entire supply chain. “There is no point having data if everyone cannot access it,” he adds.
“We have to leave the documents behind and move to data. We have to remove the manual intervention of human beings.”
It’s a vision shared by many others: IATA has the e-freight initiative, which aims to build an end-to-end paperless transportation process for all air cargo. It Involves three types of electronic documents: custom, transport, and commercial and special cargo. The initiative has been supporting the adoption of the Electronic Air Waybill (e-AWB), launched in 2010 by IATA. Since then, it’s become the default contract of carriage, removing the need for paper AWBs.
In the air freight pharmaceutical industry, where total transparency is fundamental to guaranteeing cargo quality, two leading players have just announced the creation of a direct host-to-host connection. DHL Global Forwarding and AFKLMP are not only automating shipment data but also sharing essential data such as container temperatures. By further integrating their digital systems they are enhancing data reliability, increasing transparency and improving efficiencies.
Airport Cargo Community Systems (ACCS)
Another great example of collaborative solutions using digital technology is the emergence of the ACCS. Basically, an ACCS is a digital information platform that cuts down on paperwork and duplicated data and that allows all community members to interface seamlessly.
By enabling all the parties involved in transporting cargo, such as forwarders, ground handlers, airlines and customs, to communicate electronically with each other, an ACCS can help improve cargo movement, reduce overall logistic costs, improve supply chain planning, and reduce duplicated work.
Major European airport hubs like Frankfurt, Brussels and Amsterdam stole the lead in establishing community systems. But other regions like Mumbai and Singapore Changi have followed their lead, and at the start of 2020 the USA got its first ACCS at Hartsfield-Jackson Atlanta International airport.
Each ACCS that’s launched uses the latest platform available to boost operational performance, helping enhance the digitisation of the air cargo supply chain—and its efficiency.
Digital air freight corridors
You’ve heard of trade lanes, and you’ve probably heard of air travel corridors for quarantine-free travel during the pandemic. But digital air freight corridors?
The idea has been kicking around for a while. The aim is to improve shipment visibility and to optimise the flow of cargo data between two countries or even two airport communities. All stakeholders in the supply chain would benefit, but it does require a large dose of collaboration and trust.
Stan Wraight, President of Strategic Aviation Solutions International (independent advisers and consultants to the aviation industry) would certainly like to see digital air logistics corridors connecting multiple airports. He believes they would enable the destination country to get shipment information before the goods arrive and the origin country to get status updates in real time. Such corridors would boost not just the air cargo industry but the entire logistics industry.
He’s not the only one keen to adopt a system of digital air freight corridor. Airports are too. They see the added connectivity as a gateway to faster and more reliable just-in-time deliveries. Sadly, no corridor has yet been established. The nearest we’ve got so far is a memorandum of understanding signed in 2018 by Kale Logistics Solutions and Cargonaut to create a digital corridor between the airports in Mumbai and Amsterdam. Let’s hope this initiative gets off the ground sooner rather than later.
Enhancing the management of Unit Load Devices
Improving the efficiency of air cargo transportation wouldn’t be complete without improving the management of Unit Load Devices (ULDs). There are roughly 900,000 ULDs in use by the world’s airlines. Rarely in the owner’s possession, a ULD might be transferred between a dozen or so different parties during a single cargo movement.
Keeping track of these essential resources is challenging, especially when the ULD passes between different airlines (known as interline movement). Every time a ULD gets lost, it costs stakeholders time and money.
According to Air Cargo Eye “some five per cent of the global ULD inventory (45,000 units, worth $50million) simply go missing”. Unfortunately, the code-based system used to identify ULDs doesn’t prevent them going astray, and RFID chips and GPS systems, thought at one time to be the answer, have proved to be unviable economically.
But tracking has now entered a new and improved phase. Major carriers and ULD management companies have started using Bluetooth-enabled ULD tracking technology to analyse ULD movements. The Bluetooth tags can be linked to an e-AWB and ULD’s serial number, enabling transporters to know where their shipments are at all times.
Other digital tools are being created all the time. Take for example ACL Airshop’s FindMyULD app, which collates all the company’s ULD management services together into one seamless tool. Developments like these will certainly help to plug those efficiency gaps.
Maximising the efficiency of Unit Load Devices
At VRR, we fully support all these and other developments. But we know that optimising the efficiency of the air cargo industry wouldn’t be possible without optimising the air cargo industry’s hidden heroes: ULDs.
We’ve developed a ‘We Keep It Efficient’ series that focuses on multiple application usage, increased loading speed, enhanced durability and maximised cargo volume. They not only make a loader’s life much easier by speeding up the loading process but also enable transporters to ship as much cargo as possible inside a single container.
We may not be able to help develop a digital air corridor, but we can certainly improve the efficiency of ULDs—and help address the efficiency of the air cargo industry at the same time.