Bad gateway: Downside of digitalization

Digitalization has driven a major shift in air cargo operations since the pandemic illustrated a need to pivot to a more modern business approach. Integrating innovative technologies improves efficiency, increases safety, saves time and reduces costs.

[caption id="attachment_57135815" align="alignright" width="300"] (Courtesy/CanStock)[/caption]

In 2023, 60% of air cargo operators used digital booking tools to streamline operations, according to Freightos subsidiary 7LFreight , a digital booking platform.

More than 85% of IATA member airlines were using electronic air waybills as of April 2024, compared with 70% in 2020, helping eliminate paper processes.

From automation in warehouses, digital tracking, sustainable technologies, AI for predictive forecasting and more, there are myriad ways to integrate digital tools into everyday workflows.

On the surface, there doesn’t seem to be a downside to digitalization. But with technological improvements come new challenges and not all of these have solutions yet.

Supply chain operators are asking if AI should be regulated and how? Will more technology increase cybersecurity risks? Will reliance on automation eliminate jobs? When digitalization derails Standardization and visibility through digitalization are imperative to curating a well-oiled machine, industry leaders agree.

Sometimes, however, there can be major derailments in the best laid plans.

Australian carrier Qantas Freight was under scrutiny in May after a data breach of its mobile app allowed some users to access other users’ data.

“Current investigations indicate that it was caused by a technology issue and may have been related to recent system changes,” the airline said in a May 1 statement.

In September 2023, the carrier experienced a disastrous freight jam after its new digital booking tool failed, leading to spoilage of perishables and a cargo backlog that lasted nearly a month.

[caption id="attachment_17686" align="alignleft" width="300"] (Courtesy/Qantas Freight)[/caption]

“There [were] severe delays in picking up shipments from the Qantas terminal purely because they [were] not able to locate goods,” Joe Carbone , founder and managing director of Australian forwarder Apollo Global Logistics , told Air Cargo Next in an October email. “After drivers had been queuing for hours, they had been turned away with either empty or near-empty trucks.

“Initially the information Qantas was putting out by way of notices was not consistent with what was actually going on,” he said. “Thirty percent of our shipments [were] delayed.”

Qantas declined to disclose to Air Cargo Next the cause of the digital booking mishap. Risk management Focusing on identifying the problems rather than figuring out how to digitalize is key for customers, Karin Stevens , executive vice president at risk management solutions provider Overhaul , told Air Cargo Next .

Overhaul helps forwarders digitalize operations to mitigate security risks. The company acknowledges that, as technology advances, so do cybersecurity threats and theft tactics. “Today, what we’re seeing with the cargo criminals and counterfeiters is that they’re essentially running their operation like they are entrepreneurs,” — Karin Stevens, executive vice president at Overhaul

“They’re running their operation like a hyper-growth business. ... So, those areas of pressure certainly are causing our customers to demand risk-management solutions," Stevens said.

Technology is helping criminals become more sophisticated in their practices, Danny Ramon , intelligence and response manager at Overhaul, previously told Air Cargo Next.

[caption id="attachment_57137328" align="alignright" width="300"] (Courtesy/Overhaul)[/caption]

While most criminal rings are “a little behind the curve” of technology advancements in the industry, they benefit from their understanding of the supply chain and the increasing importance it plays, Ramon said. Opportunities for hackers With digitalization, cybersecurity risks are heightened. More digital systems mean more opportunities for hackers, Brandon Fried , executive director of the Airforwarders Association , told Air Cargo Nex t.

“It’s therefore crucial for the industry to take the lead in focusing on data security standards and mandatory testing for air cargo systems,” he said. “By proactively developing these protection measures, the industry can maintain its autonomy and prevent potential data breaches that could expose sensitive information.”

IATA is attempting to do this by standardizing and digitalizing data.

IATA’s more than 300 members have until January 2026 to implement the organization’s ONE Record platform, according to the target set by IATA in 2021.

The platform, according to IATA, is a digital tool that helps operators: Enhance data sharing and collaboration; Provide real-time data access; Improve data accuracy and consistency; Increase transparency and traceability; and Reduce paperwork and manual processes. The initiative aims to use the platform as “a data-sharing standard that provides a single record view of shipments, facilitating data integration, system connectivity and security among airlines” and other operators in the supply chain, according to IATA's website. AI unknowns AI is the latest buzzword in air cargo — and it has far-reaching effects on supply chain operators.

From reducing manual processes with intelligent robotics to predictive forecasting of weather patterns and routes to improving efficiency and data-sharing in real time, AI is redefining air cargo operations.

“As we go forward, AI is going to play a very pivotal role , but you have to clearly define the use case,” Suneet Gupta , vice president and global head of cargo community systems at Kale Logistics Solutions , previously told Air Cargo Next .

Fried agreed, saying there are still “unknowns” when it comes to AI technology and how it may be governed in the future.

[caption id="attachment_57142546" align="alignleft" width="300"] (Courtesy/Overhaul)[/caption]

“AI is a relatively new product in the logistics space, so it may be too early to impose a regulatory framework,” he said. “Therefore, we must let the free market decide what is appropriate for the industry. That said, AI algorithms can inherit biases, unfairly impacting some shippers, so transparency in AI development is essential. Additionally, AI decisions can be opaque, and human oversight is needed in designing systems depending on AI implementation.”

The European Union agreed to impose regulations that would limit AI technology in December with its AI Act, introduced in 2021. While the EU encourages innovations in technology, it recognizes the need to protect national security and jobs.

The AI Act includes: Limitations on certain apps, including those that may pose threats to citizens’ rights and democracy with facial recognition databases; Law enforcement exemptions; Obligations for high-risk systems, such as those that have a safety element, like medical devices; Guardrails for general AI systems; and Measures to support innovations for small and medium-sized businesses. Further, AI can only be used efficiently when there is enough digital data to support it, something the air cargo industry is slowly moving toward, Fried said.

“While digitalization is a powerful tool and will continue [to improve], thoughtful implementation is critical to mitigating potential downsides,” he said. Robots rising up As digitalization reduces the need for people to perform repetitive or tedious tasks, there is a growing fear that major forwarders including UPS , FedEx , Amazon and DHL will cut warehouse staff, replacing people with robots.

[caption id="attachment_67292" align="alignright" width="300"] (Courtesy/Amazon)[/caption]

The global airport robotics market was valued at $565 million in 2020 and is projected to grow to $2.6 billion by 2030, according to Allied Market Research .

The robotics market for warehouses reached $6.1 billion globally in 2022, with expectations for it to grow to just less than $16 billion by 2030, according to market research company Statista .

UPS said in its first- quarter earnings call on April 23 that it maintains a ratio of 15:1 robots to people.

Packages are only touched by humans “once when they are unloaded and again when being loaded back into a container or truck for departure,” UPS spokesperson Jim Mayer previously told Air Cargo Next . “Automation does the rest through 155 miles of conveyor belts. That automation, which we’ve continued to develop, is now used throughout our network.”

Automation allows robots to perform high-precision, repetitive jobs, while freeing workers to focus on tasks needing more skill, he said.

However, about 20 million manufacturing jobs in the U.S. could be lost to automation by 2030, according to a June 2023 report from California-based career consultancy Zippia . The s also stated: The U.S. is home to 310,700 industrial robots, a number that increases by at least 40,000 each year; Automation across industries could eliminate 73 million U.S. jobs by 2030; 37% of Americans are worried about automation displacing them; 85% of Americans approve of automation only in jobs that are dangerous or unhealthy for people; Installation of industrial robots has increased at a 10.28% compound annual growth rate over the past decade; 25% of American jobs are highly susceptible to automation; and Globally, there are 3.5 million operating industrial robots as of 2021 — a 17% increase from 2020. “AI-powered automation may lead to staff reduction in cargo handling and documentation tasks, so companies need to prioritize retraining programs,” IATA’s Fried said. “These programs can help ensure a smooth transition for impacted workers, minimizing the potential negative impact of AI automation to ensure a smooth transition for impacted workers.”

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