3 predictions for air cargo in 2020

Last week, our sister publication Air Cargo World, presented its second annual ELEVATE conference in Miami, providing a deep-dive into how digitalization and innovation are rapidly altering the air freight logistics industry. Trends like the e-commerce revolution, and the subsequent emergence of new players in the logistics space have made modernization central to survival for many traditional logistics companies, and ELEVATE brought together on-the-cusp logistics startups alongside well-established stakeholders from across the air freight supply chain to explore emerging technologies, and best practices for their implementation.

Today, US-based information technology company Unisys announced three major predictions regarding how innovation and digitialzation will transform the air cargo industry by 2020.

Let’s see how these predictions stack up with experts from ELEVATE:

1. Smart warehouses will become a reality: warehouses will become more dynamic, turning to IoT and voice-enabled AI for faster processing of shipments. Recent innovations, such as smart glasses used to display information triggered by a barcode or QR code on a container, will be taken to a new level by incorporating scanners to automatically capture and input information into the warehouse system, and integrating voice AI to initiate actions. (For more on digitalization in the warehouse, see: Air Cargo World’s ‘Ware-bnb’: The rise of on-demand distro)

Perhaps warehouses and fulfillment centers are ahead of other links in the chain when it comes to implementation of AI technologies, but speakers on a panel dedicated to best practices for data usage in air cargo asserted that Artificial Intelligence and Machine learning technologies are not only relevant for other links, but a necessity if the general air cargo supply chain wishes to keep abreast with the likes of Amazon. Michael Deittrick, global CTO for the travel and transportation industry with DXC Technology said that industry participants cannot just plan to catch up with the digitalization of e-commerce giants like Amazon and Alibaba, because “by the time you finish incremental change, the technology has already shifted again.” Instead, he said, the industry has to “leapfrog” to using machine learning and artificial intelligence. This in turn, requires collaboration amongst air cargo stakeholders (for more on Machine Learning, and AI, see Cargo’s Crystal Ball: The power of machine learning).

2. Drone use will take off – inside the warehouse: Though the much-anticipated mainstream rollout of drones delivering parcels to the customer’s doorstep is hampered by flight space restrictions, government approvals and privacy considerations; we predict the immediate application of drones in the warehouses to conduct inventory checks more often and accurately, replacing the largely manual process. Drones will also use sensors to monitor environmental information such as light or temperature for perishable food, pharmaceuticals or livestock, and raise alerts to unusual activity or distress.

Robots and drones undeniably have an increasingly important role within the warehouse, but panelists at ELEVATE were quick to add that drones are increasingly being utilized in less-regulated parts of the world, namely outside of the United States and Europe. China-based e-commerce heavyweight JD.com for one, expects to have more than 150 drone launch facilities in operation by 2020, completing commercial deliveries.

3. New alliances will pave the way for long-term revenue optimization: With cargo capacity potentially increasing faster than cargo demand, capacity management has become a top challenge for airlines. As a result, we predict a shift toward longer-term revenue optimization based on strategic alliances between airlines and organizations with large ongoing delivery requirements such as postal authorities, major online retailers, and supply chain management companies. This will require airlines to provide partners with transparent real-time access to available capacity and predictive analytics to determine best routes based on speed, reliability, and cost.

Increases in bellyspace cargo capacity has, until this year, outpaced demand growth for air cargo, which has many stakeholders considering the viability of utilizing passenger aircraft bellies for e-commerce cargo. In such a scenario, collaboration between carriers, forwarders, handlers, e-tailers, and other links in the supply chain would be crucial. Some companies, like Amsterdam-based 12Send is already piloting a program which relies on KLM bellyspace for same day intra-Europe deliveries.  There do however, exist many obstacles and limitations inhibiting better bellyspace utilization, including high investment costs, security concerns, the need for quick turnaround times. Additionally, even though bellyspace capacity is growing, much of it is useless.

Regardless of the degree to which bellyspace capacity will be utilized, ELEVATE speakers agreed that collaboration is key to better utilization of big data. Dan Acosta, CEO of Globatom said during a panel on data analytics, “you have to find a way to make sure everyone collaborates, that the efficiencies pay for the technology, and that data is being shared across the board,” to turn collected data into actionable intelligence.”

Andrés Perez, director of business intelligence and customer experience at Swiss WorldCargo, said that much of the data analytics for Swiss WorldCargo relates to pricing for the limited good of airfreight capacity. Using big data to implement a dynamic pricing system helps “to ensure that we have for the right customer the right price,” Perez said, adding that pricing concerns require “a lot of manpower for us on our side, and on the forwarder side, so that’s where big data could really help us to ensure the best fit.”