Paying their way: Air cargo payment platforms battle for dominance in a new field

In today’s world of e-commerce, some legacy operations still survive well into the 21st century: organizations that demand a fax to establish an account, unavoidable trips to a government office with two forms of identification, and requiring a courier with a check to secure the release of cargo from a warehouse. These are some of the holdovers in air cargo logistics. However, like many processes being upgraded in the information age, online payment platforms have the potential to disrupt current industry practices. During the coronavirus pandemic, technology and digitalization strategies put into place years ago are being pursued as companies look for a competitive edge to survive in a new and more difficult economic and global trade reality. With the advent of overarching management systems to replace numerous niche processes across company operations, logistics providers will find it easier in the future to pursue new add-on offerings, including the digital booking and payment platforms that have gained traction in recent years. Some airlines and forwarders going the digital route have built their own systems to accommodate online payments via an account established with company, but specialty companies PayCargo and CargoSprint are the major names in the field. The two have built platforms with specialty offerings like slot-management tools and APIs for use on third-party sites. In addition to forging new business relationships and expanding their technology offerings, the two big players have been involved in legal battles since PayCargo filed suit against CargoSprint in multiple U.S. district courts last year, alleging violation of anti-trust laws and trademark infringement. The outcome has yet to be decided, but the potential the cases have to shake up this nascent area of airfreight technology is yet another factor contributing to the slow ramp-up of tech adoption in this area. The potential exists Even as logistics companies and airlines are finally updating old legacy systems to keep up in a new digital world, payment systems are rarely their top priority. Southwest Cargo and C.H. Robinson recently told Air Cargo World that track-and-trace offerings are the most vital for their air cargo customers. Meanwhile, an increasing number of companies are entering the digital freight forwarding space, with the U.K. startup Beacon most recently making waves for attracting Amazon chief Jeff Bezos as an investor in its Series A fundraising round. Even companies that have yet to make serious efforts toward digital payments systems see a benefit in the service. The technology advances some companies are announcing this year constitute a first step toward future improvements. American Airlines Cargo, for instance, implemented the end-to-end management system iCargo from IBS Software in October 2019, and this month launched new booking features through its AACargo.com website. The launch reduced the number of applications in use with the airline’s cargo division from approximately 90 to 10, according to AA Cargo’s head of transformation, Angela Hudson. “There’s a whole host of things we see, now that we have the end-to-end management,” Hudson told Air Cargo World . “Every time we come across something that can add value, we can consider it. With the legacy system, we had to say ‘no’ to so many things,” but the new system “makes it easier to innovate or integrate.” The payment platform companies are aware of the potential offered by the new systems and are working directly with the logistics companies offering end-to-end management systems — including IBS Software, Unisys and Champ Cargosystems — to integrate their offerings into the platforms. For AA Cargo’s part, Hudson said the airline currently has a product through Citi, which also backs the airline’s reward credit cards, allowing cargo customers to pay online invoices. AA Cargo has also accepted payments through PayCargo since 2017, according to Lionel van der Walt, PayCargo Americas president and CEO, although AA Cargo has not selected PayCargo or any other platform as its sole payments provider. AA Cargo’s Hudson said the company is “looking at partners like PayCargo,” but hasn’t selected such a service yet. However, particularly amid the pandemic, online systems are in demand to reduce face-to-face interactions. “There is, of course, interest in this right now, so it’s definitely something [shippers and forwarders] want and need, and something we’ll be looking at as we finish the iCargo implementation,” Hudson added. Eytan Buchman, chief marketing officer of Freightos Group, touted the increased utilization of digital bookings and dynamic airfreight pricings via its WebCargo by Freightos platform as a sign that airlines and freight forwarders are adopting new technologies at a faster rate compared to the early 2000s. The eventual move to online processes — including payments — is coming, Buchman said, but “there are probably a couple of milestones to hit before payments move online, like messaging and better tracking technology.” Regardless, the eventual movement to online payments is “inevitable,” he said. However, not all logistics companies are convinced of the necessity of utilizing such offerings in today’s markets. Germany-based Hellmann Worldwide Logistics recently announced the implementation of the widely used CargoWise transport management system into its worldwide air and sea operations, and acknowledged there is also a place for payment platforms under certain circumstances — but those circumstances are dependent upon a number of factors. “If you have a complex supply chain customer, they might use [a payment system] already with one of their supply chain platforms,” said Stefan Borggreve, Chief Digital Officer with Hellmann Logistics. "With regular air and sea freight, I won’t say that there are too many customers currently” using a payment platform. But, as the rest of the industry finally begins to embrace the digital world, online payment platforms are likely to stick around and achieve wider adoption over time, Borggreve said. “It’s certainly something that in the future will be more and more in use.” An evolving field Nearly a year ago, on July 19, 2019, PayCargo filed for damages against competitor CargoSprint and founder and CEO Joshua Wolf in a Georgia Federal Court, alleging that CargoSprint was engaging in “anticompetitive conduct.” The alleged anticompetitive behavior related to CargoSprint’s SprintPass software, a system designed to enable smoother pickups and drop-offs at cargo facilities through scheduling and slot booking. Cargo pick-up and drop-off at airport facilities is historically one of the least efficient areas in air cargo operation, with some drivers waiting in queues for literally days during the most severe congestion. However, PayCargo alleges that CargoSprint’s requirement that its SprintPass customers also use its SprintPay payment platform “denies consumers a choice in web-based payment platform systems and does not permit PayCargo or other competitors to freely compete.” PayCargo also alleges that CargoSprint’s history as a PayCargo customer allowed CargoSprint to “obtain and unlawfully leverage PayCargo’s confidential information and trade secrets” in an attempt to “replicate PayCargo’s software and related systems functions,” according to court documents. In a separate filing in Florida, PayCargo has sued CargoSprint for what it termed that company’s “persistent use” of its former name, PayAirCargo, despite PayCargo’s trademark and CargoSprint’s “prior contractual agreement to cease all use of the PayAirCargo name.” Court proceedings in Florida and Georgia are still ongoing, with a trial in the Florida court set for March 22, 2021. Initial orders from the Florida court have been promising for PayCargo’s claims. The Georgia case is moving forward under an amended complaint from PayCargo after the initial complaint was dismissed. The court issued an initial preliminary injunction order in March, stating that PayCargo had shown a “substantial likelihood” of succeeding in its trademark claims, along with other standards necessary to grant the injunction. An updated order issued May 14 further discussed evidence supporting PayCargo’s complaint and enjoined CargoSprint from using the PayAirCargo name and transferring a related domain name to PayCargo. The order also denied PayCargo’s requests for an inspection of CargoSprint’s system and an accounting of all transactions under the PayAirCargo name as excessive in the current case, unless the discovery stage reveals additional information requiring a more thorough investigation. With the legal battles likely to continue unfolding in the next year, the exact offerings available to shippers as other companies pursue payments technology remain to be seen. Along with the challenges these payment platforms face now come opportunities to capture market share and position themselves for future success. If we take a lesson from the emergence of new technology-focused companies like Beacon, fellow U.K.-based digital forwarder ZenCargo and digital booking platforms like cargo.one and Freightos’ WebCargo in other areas of digitalization, it’s safe to assume that we may see new players enter the arena as airfreight technology continues to forge its path in the industry.

Paying their way: Air cargo payment platforms battle for dominance in a new field

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