Importance of innovation in the air cargo industry

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The word innovation has never before carried such wide and meaningful applications as it does now. Technology, to no one’s surprise, has taken over almost every part of our modern lives. It impacts our work, social interactions, entertainment, products, services and even our travelling.

Less than a century ago, air travel was thought to have been a luxury reserved only for the rich. Now, with the astonishing growth of the air passenger industry, flying has become second nature and inevitable part of life for millions of people. All of this was only possible through continuous innovation of the industry. The use of insights from passenger data and analytics, third party data bases, wireless networks as well as proximity sensors have all contributed to the rise of air travel. This transformation was all about simplifying – instead of lengthy queues we now have mobile check ins and paper-less boarding. Rather than spending aimless hours on long-haul flights, we can now do business or entertain ourselves with in-flight internet. The last few decades have also brought innovation to airport concierge services, visa processing, holiday packages, managing post-trip needs - including retail - and many more.

The air passenger industry now spans the area between curbside and airside and goes well beyond. The air cargo industry, however, has not been able to keep up with this. Innovation in the air cargo industry must quickly follow. There is now a growing urgency to innovate:

1. Organisations (customers of the air cargo companies) are pursuing faster business velocity.

The air cargo industry is all about delivering speed. While there may be talk of bullet-trains and other methods of cargo delivery, air cargo has and will likely remain the preferred and traditional choice for fast delivery. But this business does not need to be limited to the air. There is a growing emphasis on intermodal transportation -- pre-flight and post-flight -- where the air cargo industry can help improve business velocity and streamline the process for its customers. 

2. Competition is growing and expanding.

While there are many ongoing conversations about driverless cars, and the ethics surrounding it, many companies are already putting their automated cars forward to stay ahead of the business. Uber’s self-driving trucks are already on the road, delivering cargo across the US. As the technology evolves further, we are fast approaching a time where human supervision of each vehicle will be unnecessary. With an empty driver’s seat, ground transportation costs are going to tumble. There will be no need for alert drivers and rest stops, and there will potentially also be fewer motor accidents – all of which will amount to meaningful savings in the long-run. Automation will also enable businesses to have a better control over their service reliability.

3. Customer expectations are changing.

In a heavily competitive industry, customers have continuously growing expectations that their cargo is moved faster and with greater efficiency. Additionally, today’s customers also want complete and total visibility of where and how their cargo moves. They want to have greater control over the movement of their cargo in real time. Naturally, with growing competition, they expect these services to be delivered at a lower cost. To achieve this, goods are shipped from the US to Dubai by sea, and then transported by air to Europe - because it is cheaper. What this means is that air cargo is effectively losing valuable business to the shipping industry.

In general, customers do not place a lot of importance on who specifically handles the delivery as long as the cargo arrives to the destination fast, at a competitive price and hassle free – similar to express delivery. This means freight companies must also take on the role of express delivery companies.

However, having said this, the air cargo industry is by no means in a position where it is unable to innovate in this digitally transformative generation. Delivering goods by the means of air transportation is a preferred choice of large portion of the worlds’ businesses due to its reliability and speed. The air cargo industry carries 1 per cent of the world’s freight (in volume) and delivers 35 per cent of the value. Therefore, it stands to logic that it must also be able to deliver 35 per cent more innovation.

The fastest method of achieving this is to look at use cases and learnings from adjacent industries. As an example, Maersk has partnered with IBM to leverage blockchain in a bid to remove barriers within global logistics’ supply chain for ocean freight. UPS leverages Amazon’s Alexa to run a natural language chatbot to provide information on shipping rates, UPS locations and shipment tracking. Delta has created an IoT network made up of low-cost Bluetooth devices to provide real-time tracking of ULD shipments. These examples show how technology is used in practice by businesses to deliver high quality service to their customers.

With the onset of Industry 4.0, innovation is on every business manager’s agenda. Companies must learn to grow and follow the trends and inventions of the world around them, or risk falling behind their competitors. The vital question is: Which technologies should the air cargo industry opt for to launch their innovation journey?

My own experience of working with cargo and travel clients shows high adoption of Virtual Reality (VR), IoT, cloud, e-docs, scanning and dimming machines. In addition, there are several areas where early stage proofs of concept are brought to fruition with the use of blockchain, Big Data analytics, drones and wearables for animals.

In other words, the technologies that enable innovation, and the reasons to innovate are abundant. There is no time to waste. The air cargo industry must up its game to remain in the hunt.

Deviprasad Rambhatla, Vice President & Global Head – Travel, Transportation, Hospitality and Public Sector industries, Consumer Business Unit, Wipro Limited
Image Credit: Robert Stearns / Pexels