As newer, faster, more efficient and greener technologies develop; now is not the time to be in the legacy subset in any industry! The air cargo side has traditionally been a little slow to adapt to the global trends, but that seems to be about to change along with the growth of e-commerce and the increasing and more personalised needs of customers. Many big and small air cargo actors have started to take steps towards smarter and greener air cargo and logistics. At the same time, the industry is also facing new challenges, such as retaining its talents.
We reached out to the industry’s opinion leaders and asked them to outline their visions and roadmaps for 2020 and beyond. Read on for the top trends and challenges industry experts predict will be big this decade.
E-commerce as a technology driver
Brendan Sullivan, Head of e-commerce and cargo operations at the International Air Transport Association (IATA)
IATA has identified six major trends that will impact the industry in a significant way: Augmented Reality (AR) and wearables, robotics and automated systems, IoT and connected devices, drones and autonomous vehicles, advanced data processing (big data, predictive, AI, etc) and green, sustainable, net-zero building technologies.
The digital landscape shaped by innovations like IoT, and what that allows the industry to do, such as implementing AR in the warehouse, will continue to be some of the most significant changes in the near future.
We still see the sharing of information and data as an issue, but some collectives and communities understand the benefits and can start immediately sharing and gaining.
I think one need only look at e-commerce to see that the way consumers expect information and visibility on all aspects like availability, location, condition, is changing drastically. This is also making its way into the B2B world, and so this kind of reliable information is becoming a must-have to be a player in the industry.
People power is still essential
Sara Van Gelder, Cargo business development manager and business development at Brussels Airport Company
Which technology will deliver the most significant change? None, because people will! We are all so busy scanning the tech scene for new technology trends that could finally push the air cargo industry more towards digitisation. Meanwhile, there is more tech available now than we can absorb as an industry within the next five years. Today, we are hiding behind the technologies, and we jump from discussing blockchain to AI, to big data to augmented reality, while the people handling our precious air cargo still use walkie talkies, piles of paper or maybe a pdf attachment to an email.
As far as consumer trends are concerned, customers have shifting expectations. When we order something online, logistics is part of the image of the product you buy. When a customer can select when and where a package is delivered, and it can be delivered as promised, they are willing to pay €1 more. We in the logistics industry need to understand that we are part of the product a consumer buys and that we are moving towards a way of working where based on the “persona” (the parameters) of the customer an algorithm will suggest the best route through the logistics network.
More focus needed
Moritz Claussen, Founder of cargo.one
The industry has in the past been struggling to share and make sense of its own data. This has often led to opaque processes internally and yielded little insight, for example, into customer expectations and needs. In fact, the industry was widely lacking a customer focus in the past years. Putting the customer first and internalising their perspective to create innovation will be a key challenge for many traditional players in the market for the coming year. At the same time, this will be the only way for those players to survive in the years to come.
Making use of data and leveraging new technologies to increase customer-centricity to advance business growth requires a fresh, new mindset, and the willingness to explore new opportunities. Aside from buzzwords like e-commerce, I believe that the customer’s needs and expectations for transparency and visibility along the supply chain, starting with a search for airfreight capacities and ending with a shipment being delivered, will have the most significant effect on the industry. There seems to be a trend amongst carriers to focus on more specialised cargo, such as pharmaceuticals, with higher yields and better-to-predict volumes, although general cargo will remain the vast majority of cargo flown over the next few years.
AI is redefining key processes
Adrian Kosowski, Head of research at NavAlgo
I predict that the players who will gain the most in 2020 will be those that have understood that every technology adopted is not a success story in itself, but just a step towards comprehensive, data-driven optimisation of their core business. Supply chain management is increasingly being redefined by AI, and most profoundly so in the areas of logistics network optimisation, spend analytics, and sales and demand forecasting.
The air cargo industry is being challenged by both actors in the new economy and by the development of other modes of transportation. E-commerce giants, such as Amazon and Alibaba, account for an increasing proportion of carried cargo and they are not shy to align the entire logistics process around their operations. Besides that, new shipping services with intelligent containers, sea-based or intermodal, and increasingly featuring a rail segment between Asia and Europe, offer a level of cargo visibility and traceability that is winning over the hearts of customers and drawing them away from air freight.
Transforming public perception
Patricia Varela, Assistant Manager, operations innovation and change management at International Air Transport Association (IATA)
Air cargo is struggling to attract and retain the right talent. Today, a third of human resources executives in the air cargo industry point to retaining and developing staff as their biggest challenge*. This problem is expected to become worse in the coming decade as the last baby boomers retire. Our challenge as an industry is to transform and change the perception that we are not an attractive, innovative, and diverse sector, and to create opportunities for our people to grow inside the industry.
Automation will play a key role in transforming air cargo in the coming years, partially solving issues related to the shortage and high turnover of the workforce while requiring new skillsets for all levels of staff. The integration of robots and autonomous vehicles in the warehouse will contribute to improving safety and phasing out repetitive tasks. This will require the industry to carefully manage co-work within a currently highly manual and flexible workspace. We also expect an increase in the use of virtual and augmented reality, contributing both to enhancing staff training and the speeding up of operations.
*IATA Global Training Market Assessment, 2018
New challenges creating new opportunities
Frederic Horst, Director at Cargo Facts Consulting
The big intercontinental lanes (Europe to Asia, transpacific and transatlantic) will continue to be weak, and it's not just linked to trade tensions, but is also due to slower economic growth in general. The big cargo carriers are very exposed because they are present in most markets and have little opportunity to deploy capacity to more exciting markets. The biggest challenge in 2020 is going to be making money, but it will be a good year for companies to get back to basics.
2020 will, however, be the year of regional trade and niche market growth opportunities. E-commerce is a growing segment in terms of volumes, but has trouble paying its way. Express carriers, postal companies and air cargo carriers are participating in moving this business, but while volumes have grown, yields have dropped. This is an excellent time for companies to start thinking about developing new revenue opportunities while taking a good look at technology solutions that help to reduce costs, particularly fuel, and increase efficiencies such as capacity usage and deployment.
Small but robust steps forward
Rickard Ingvarsson, CEO Asia and global head of airfreight at Scan Global Logistics
The freight forwarding sector is traditionally very slow to adopt IT efficient end-to-end solutions since most of the time the chain of activities are managed by subcontractors who have their own unique systems and needs. There isn’t just one standard but multiple standards, which is why global integrators still have a cutting edge over freight forwarders when talking about IT efficiency door to door.
I don’t see any quick fixes that will revolutionise the industry, but there have been many global project attempts, such as Cargo2000 (an industry initiative aiming to implement a new quality management system for the worldwide air cargo industry), as well as the rollout of the eAWB (the electronic Air Waybill), involving shippers and freight forwarding companies, as well as carriers and authorities – both of which have brought improvements to the logistics community. The industry remains global, fragmented and competitive with small incremental technology advances, but it’s the people behind the systems that make the difference, something we at Scan Global Logistics put a lot of emphasis on.
Drones will handle the load
Celine Hourcade, Founder of Change Horizon
Digital technologies will drive the "smartisation" of air cargo and data will be shared and intelligently processed to ensure assets are smartly utilised, optimised and maintained, and the process is efficient from start to end. Air cargo is becoming a lot more reliable and predictable, which will result in higher customer satisfaction as well as a drastic reduction of perishable waste. Sharing of data, ideas, best practices and caring for the environment and people will be the focus of the new year and the new decade. I am looking forward to supporting my customers to make their transformation programmes happen.
One example of innovation is the application of drone technology, and I wholeheartedly believe that 2020 will see big leaps in drone delivery implementation moving towards a revolution in the transport of goods and even passengers. The general public still only sees the recreational applications of drones so there is a big shakeup coming in public perception. We are still very much in unknown territory regarding technological and economic feasibility, not to mention the necessary regulations, but I am 100 per cent certain that there will be unmanned cargo transport within the next decade.
Sniffer dogs in the loop
Brandon Fried, Executive Eirector, association leader, industry advocate and air cargo expert at The Airforwarders Association
Despite a reduction in air cargo volumes in 2019, Airforwarders Association members remain optimistic with volumes anticipated to increase 5-10 per cent in 2020. In this past year, we saw significant growth in temperature-controlled shipments, including perishables and pharmaceuticals. We believe this trend will continue along with an upsurge in special projects shipments which are not easily handled within the traditional express carrier model. These consignments will require a creative problem-solving approach that may utilise other transportation modes in addition to air cargo.
2020 will also see the introduction and distribution of computerised tomography (CT) technology to be used at the passenger and baggage screening checkpoints. Unfortunately, this tool has still not been certified or vetted by the TSA in the United States for use in screening cargo. Therefore, the industry will continue its reliance on the effective but time-consuming technology that we have traditionally been using. A significant development that has produced efficiencies and increased detection effectiveness is the TSA Third-Party Canine Screening Program now in effect. It leverages the use of canines, furnished by private companies and certified to screen cargo at faster rates with great effectiveness.
High-value cargo adds value
Caryn Livingston, Editor at Air Cargo World and Jet Fuel Innovation News at Cargo Facts
One of the significant challenges facing cargo carriers today is declining cargo load factors, so I expect part of the solution will involve cutting back on certain routes that don’t make economic sense. Some of the data products major carriers are implementing for route planning could be a benefit as carriers reevaluate their networks. Perhaps some operators will make changes to their fleets, or seek out more flexible arrangements with partner airlines, forwarders or lessors, to manage their load factors more efficiently.
Pharmaceuticals may be the most popular, and high-value, cargo for 2020 for a couple of reasons. One of the most important factors is the potential impact of Brexit on European pharma supply chains. Airfreight is not always the top choice for pharma shippers, due to both cost and a less-than-ideal history of frequent temperature fluctuations during shipment, but airfreight is, of course, the fastest mode of transport. If there are interruptions or new customs obstacles in the supply chain of pharma shipments to the UK post-Brexit, the potential is there for a spike in airfreight shipments due to the importance of the cargo.
Retaining talent while upping the speed
James Graham, Editor at Air Cargo Week
Any technology that takes humans out of the equation is going to drive the most significant change for 2020 and beyond in the air cargo industry. The ambition of many supply chain providers is for a package to be touched by as few human hands as possible on its journey. Also, robotics, AI, geo-fencing and drones will be the leading technologies involved in de-humanising the supply chain. Demographic changes in the Western world mean that fewer graduates are interested in entering the freight industry, which is perceived as old-fashioned, hard work and lacking glamour, which increases the push for robotics. Another challenge is that when you do find graduates, they have a different work/life balance and do not want the long work hours' culture of their parents.
There are also likely to be challenges from the likes of Amazon Prime, to say nothing of Alibaba, should it ever break out of China. Any trend to turn to ‘local’ production will hurt long-distance importation of goods. Air miles are now an active political and societal force. At the same time, demand for e-commerce next-day delivery from the other side of the world remains a potent factor in the industry. My prediction is that if players end 2020 in the same position as they entered it, they will be happy.
App-enabled cargo service
Jeffrey Lee, Associate Editor at Cargo Facts / Air Cargo World
The industry is hopeful that 2020 will bring some improvement or at least be “less bad”. That’s not to say that it won’t be riddled with uncertainties, though, just as it was in 2019. One of the most impressive developments has been the availability of instant online booking and confirmation and the ability to do instant booking and confirmation through the cargo.one platform. It will make the air cargo process much more like booking a passenger flight than it was not so long ago. While technology and digitalisation have frequently been buzzwords over the past few years, it’s encouraging to see that companies involved in air cargo are actually investing in equipping themselves with the necessities to move the industry forward.
This is partly related to both of the above – significant challenges include the various uncertainties of world trade, politics, etc. But on a more specific note, another major challenge is how long it takes for changes to gain momentum. One example is IATA’s electronic air waybill (e-AWB) initiative which was launched in 2010. Even after e-AWBs were made the default option for enabled trade lanes beginning this year, the penetration rate is still hovering around 66 per cent.
New and secure data sharing
Nathan De Valck, Cargo and Product Development Manager at Brussels Airport company/chairman and co-founder at Pharma.Aero
Pharma shippers are telling us that bringing supply chain visibility for pharma shipments to all stakeholders is still a challenge. Capabilities of real-time tracking across several KPIs, such as shipment temperature and location, are not standards available for all the steps in the air cargo supply chain. Digitising the air cargo supply chain would be the solution to interconnect with all the stakeholders and use the full potential. Although the data already exists, it remains unlocked in data silos of the supply chain operators.
To overcome this, Pharma.Aero has launched a digitisation innovation project after testing and developing the Global Pharma Tracker prototype, a common, data-sharing digital platform that uses live data from real shipments from its shipper members, on a selected trade lane. This effectively addresses the visibility gaps in the pharma supply chain. Through data sharing by and across the different actors in the supply chain in a trusted and secured environment, the GPT identifies and aggregates essential data, and provides the necessary transparency that the industry has been demanding.
Keeping the sustainability issue on track
Martin Langaas, Director of Traffic Development and Cargo at Avinor Oslo Airport
In terms of outside influences like trade wars and the like, the Norwegian air cargo industry expects a reasonable amount of growth for this year, and in no small part due to the free trade agreement between Norway and China. We will see increased demand for rapid service to China, the rest of Asia and to the Middle East. 2020 will also finally see an increase in electronic airway bills, creating a much more straightforward process in the supply chain.
There is a huge debate about sustainability within the air cargo industry which is influencing changes to the cold chain, like the replacement of styrofoam boxes that are used for seafood delivery. The sustainability issue will address things like alternatives to using ice to keep produce at the required temperature, as about 15 per cent of the weight of the packaging is currently the ice alone. Even though sustainability is essential, I fear the debate is being overhyped to the point where the topic of sustainability will have a negative connotation, hindering longer-term debate. The challenge will be to put suggestions on the table without popularising them.
Talent and technology pose both challenges and opportunities
Michelle Halkerston, owner, president and CEO at Hassett Express, LLC
Looking at the industry from the perspective of small and mid-sized freight forwarders, I believe two areas, talent and technology, will continue to pose both challenges and opportunities in 2020. From a technology perspective, cloud-based software and connectivity tools have helped level the playing field. This allows forwarders of all sizes to utilise technology to solve business problems and improve efficiencies.
At this point, freight visibility and tracking are some of the most requested and expected services but in a multi-partner transportation chain, the complexity increases and tracking just the plane, truck, etc, isn’t enough. However, some interesting IoT solutions are coming up that can track the actual freight across all the touchpoints.
The legacy players are fading out
Mikko Tainio, Managing Director at Finnair Cargo
Customers will be looking more closely at carriers’ sustainability reporting, and there will be increased scrutiny of the CO2 impact of shipments. There will also be higher expectations for compensating for emissions, which will give carriers with new and efficient fleets and the shortest flying routes even more of a competitive advantage. There’s a lot of interest in modern air cargo infrastructure and operating models, and we will see a lot more new and efficient terminal investment plans surfacing as the old ones become obsolete in an age of automation. For Finnair Cargo, this means expansion of accurate and automated reporting channels and the most convenient ways to compensate for C02 emissions.
Digitalisation continues to renew what can still be considered somewhat of a legacy industry. New and easier ways to book air cargo are emerging and gaining a foothold. This is important because it reduces the massive volume of data issues that exist because of paper form filling. Digitalisation also improves data-sharing, and this is an essential area under development. I believe that IATA ONE Record has established itself as a standard for this. In 2020, we will see surprise ups and downs affecting the air cargo market, and that will surely be the case for the next 50 years.
Improving data handling efficiency
Paul Woolley, Senior Advisor at Aero Africa
Every part of the airline industry, from in-flight aircraft performance to online booking of air freight, is now being collected digitally. The trend towards increasing the collection, publication and use of the data towards managing it in new user-friendly platforms, is growing rapidly. Combined with the steady e-commerce growth, we continue to see that the management of all this data with new mandates from customs and regulators across the board will be one of the biggest challenges for air cargo in 2020.
With the impact of e-commerce growth and pressure mounting for changes to e-systems, cross-border customs need to conform to a uniform change. The challenge is to have a seamlessly integrated process across all borders which properly vets shippers, commodities, duties and consignees alike. Digital platforms will expand at warp-rate growth and those in the sector will need to keep up the pace for fear of losing their customer base. I can already hear the captain saying, “Please buckle your seat belts folks.”