A guide to completion

It’s all too rare that the air cargo sector gets the opportunity to come together and discuss how far we’ve come as an industry, and more importantly, where we’re going next. With the pandemic spurring tremendous growth in air cargo revenues and yields and also cementing how critical a role it plays in the global supply chain, the recent IATA World Cargo Symposium in London was hotly anticipated as a forum to debate how we work together to build on the momentum air freight undeniably has.

A central theme of conversation on the show floor was recent moves into air cargo by shipping lines as they seek to exert more control on the supply chain. Most recently MSC announced it will launch its own cargo airline, and before that AP Moller Maersk and CMA CGM made similar moves to expand from ocean freight into air cargo.

While these developments are individually not disruptive or game changing, it is important for air cargo executives to think about the longer term. Particularly, what does it mean for the air cargo product or service should this trend towards becoming “complete logistics solutions” start to become reality? The key question here then is how does air cargo have to reinvent its business model, while leveraging its core strengths – speed and reliability – to carve out a bigger portion of the value for itself.

Answering these critical questions hinges on an understanding of the complex and rapidly changing supply chain landscape we find ourselves in.

Changing customer expectations
The bottom line is that global trade continues to grow, despite the many geopolitical and economic challenges we face. International and domestic freight is keeping economies moving as ecommerce continues to boom. As ecommerce technology continues to enrich the experience for consumers, it has become obvious that expectations for digitalised services and experiences have risen exponentially

All customers expect reliability, consistency and speed of services as the bare minimum, and they expect any issues with operations to be fixed almost instantaneously. However, not all business models require or can afford such premium service. It is here air cargo needs to analyse and prioritise the right market and to develop products and offerings that can deliver more added value than it currently does. The speed with which freight businesses need to respond to changing market dynamics has gone through the roof; such is the level of competition in the field.

The promise of integrated logistics – ie. becoming a primary service provider to the beneficial cargo owner (BCO), taking control of the entire customer journey from start to finish, as opposed to delivering airport to airport or port to port services – is that it offers the opportunity to exert more influence on the value chain and better manage the flow of goods. That inevitably makes it simpler to develop experiences for performance and pricing that keep customers returning, boosting revenue in a crowded market.

A shift in mindset is needed
Making the switch to becoming a complete logistics solution provider requires a fundamental mindset shift on how to approach the scope and scale of the offering. To be successful, supply chain businesses must want to break out of their comfort zone to become more than a point-to-point player and develop a strategy for gaining greater traction in the overall customer journey.

Change is not straightforward. Meeting and surpassing customer requirements is often a complex undertaking. Take air cargo as an example – there is a clear opportunity for a sector experiencing high growth and enjoying unprecedented boardroom scrutiny and profile to transform. However, this window of opportunity is set to close quickly as capacities come back to pre-pandemic levels and air freight rates start to auto-correct themselves.

Digitalisation will power the transformation
Once the vision is in place, it is clear that technology will play a big part in powering the transformation. Complete logistics providers will need to design its offerings centred around progressive digital technology and digitalised experiences to the end customer to be able to deliver the extremely high standards such niche segments have created in the minds of the consumers. But again, it can’t be a case of developing technology for technology’s sake.

Again taking air cargo as an example, there are three critical areas where the industry can focus on digital development to define business excellence and take advantage of the opportunity to adapt:

Digital processes – redefining a way of working centred around digital
Cargo businesses should continue to redefine and transform their core business to improve efficiency. Focusing on mission critical services allows organisations to enhance the core customer experience, a critical enabler to owning more of the total customer journey. Essential areas for addressing include harmonising omnichannel sales, providing real time responsiveness to opportunities, delivering personalised offerings and experiences, automation of manual processes, and following through with superior speed and quality of service. All of which has to be developed with the core objective of delivering five star customer experience.

Digital connectivity – expand the span of control to deliver consistent and reliable service with partners
This will build on digital processes by enabling connected partner ecosystems that are equipped to provide the same level of service and process compliance. Customers can then tap into an expanded network, via a unified window which they would not otherwise have access to – again, enriching their experience and opening new capabilities. A reliable, secure and robust data interchange protocols using modern connectivity options such as APIs- is crucial in making such hyper-connected services a reality.

Digital intelligence
The culmination of a digital process and an expanded digital footprint across partner networks ultimately results in an explosion of digital data available to enterprises. This can provide the requisite fuel for the ecosystem created to become “intelligent”. This can then drive further efficiencies and avenues to sharpen service levels, identify business opportunities as well as to be more responsive to changing market conditions. Developing an intelligent, AI-based ecosystem requires big data, analytics and machine learning to build predictability value across the supply chain. That way businesses can get a real-time view of their system and have the power to react to changing market dynamics.

For many businesses, the journey to becoming a complete logistics provider will take them into uncharted and unfamiliar territory. But with the right mindset and a progressive approach to how technology makes the business customer-centric, there is vast opportunity.

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