Rethink and reinvent
Three ways Covid-19 should change air cargo technology forever. By Ashok Rajan
Air cargo is one of the unsung heroes of the Covid-19 pandemic. The industry has provided the world with medical and safety equipment, fresh produce and many other vital supplies throughout the Covid-19 crisis while passenger transport ground to a halt.
But the outbreak of Covid-19 has challenged the very core of the air cargo industry. As a sector, we have had to urgently rethink how cargo is transported around the world. And the industry has emerged with credit for its remarkable resilience and for the speed and ingenuity with which it reinvented established processes and protocols to keep cargo moving.
Being thrust into the global limelight as one of the key sectors functioning throughout the pandemic has provided decision makers with a vision for the future. It has given them the impetus to reconsider their core business strategies and their core offerings. Technology and technology-led innovation is a major part of that journey.
The digitalization of air cargo along with its hero role during the pandemic is making the industry highly lucrative to airlines that don’t currently have significant air cargo capacity. Airlines with a strong freight focus were able to adapt quickly once the pandemic hit and grounded fleets, adding new freighter schedules including more stopovers in existing schedules, which translated into more revenue.
Leading low-cost carriers, some of the hardest hit by Covid-19 restrictions, have already pivoted to adopt a freighter focus, transporting essentials like PPE and fresh produce as a means to stay afloat. But they start to re-evaluate their business models even further, and adopt freight as part of their core strategy.
You only need to look at the relative ease with which even the most reluctant businesses have enabled remote working to understand that the business world that emerges from the pandemic will be very different. This is the wave of change that air cargo needs to ride on to rethink its fundamental principles and reinvent itself into something different, bigger and better.
There are three fundamental areas that airlines and air cargo supply chain partners can work on towards this goal, with a view to creating well-defined initiatives for business transformation.
1. Accelerate digitalization and make digital the central theme of all business practices
Time and again, air cargo has been accused of being reluctant to move with the times and sluggish to adopt new technology and practices. The focus has to be on viewing all technology options – like paperless, electronic workflows, digital connectivity, data and analytics, AI and IoT – as potential tools to solve real business problems. With that philosophy in place, they can work backwards to develop effective strategies to embrace new technology and make their businesses digital.
The pandemic has propelled cargo into the center of most airlines’ central business discussions and taken on more strategic significance than ever. This should translate to greater investment in technology-led business redesign across the board, from digital sales, digital enablement of the business process and digitalized products to digitalized revenue practices.
2. Upgrade and redesign business processes to match customer needs in high growth, high value sectors
Air cargo is a premium service and the design of its products and services needs to be laser focused on the businesses it is serving. The unique requirements of high growth, high value markets such as pharma, high tech, retail and ecommerce are they are sophisticated enough to not use speed as the only measure of success. As an industry, it’s critical we harness technology to design business processes, infrastructure and offerings that are tailored to high growth sectors.
The traditional ‘one-size-fits all’ model – such as measuring success with the same set of milestones, or having the same dimensions for SLAs, track and trace or workflow control –needs to be redesigned from the bottom up. This will pay big dividends by increasing the value of air cargo and creating much needed differentiation.
3. Create a long-term strategy to develop growth opportunities
Air cargo has for decades confined its thinking within boundaries it has set for itself to play in. This worked well when there was limited competition and a high entry barrier for other modes of transport or adjoining businesses. But this scenario has changed with demand for air travel skyrocketing and huge amount of capacity becoming available through the introduction of large wide body aircraft.
These self-imposed boundaries have quickly become too restrictive to drive growth and in the future, could marginalize and commoditize air cargo operators – further diminishing the value of air cargo and adding to a vicious cycle that leads to reduced investment. Air cargo leaders need to use this opportunity to think more ambitiously about playing a larger role in supply chain management. Ocean liners are already doing this with large carriers expanding beyond port-to-port movement to end-to-end logistics solutions.
Regrettably, it took a pandemic for air cargo to be catapulted into this new position of strength. As with many industries all over the globe, the air transport sector will face further challenges as it reinvents itself. But one this is certain: companies should grasp the opportunity to invest in technological innovation and boost air cargo into new unchartered territory that could bring long-term success.
Ashok Rajan is Senior Vice President & Head of Cargo and Logistics at IBS Software, a leading SaaS solutions provider to the travel industry globally, managing mission-critical operations for customers in the aviation, tour & cruise and hospitality industries. IBS’ solutions for the aviation industry cover fleet and crew operations, aircraft maintenance, passenger services, loyalty programs, staff travel & air cargo management.