WCS 2017: Disruption finally hits air cargo as carriers pivot

ABU DHABI — There has been talk in recent years about the wave of digital disruption coming to air cargo.

Well, that wave appears to have arrived.

Air France-KLM Martinair Cargo, as an example, is on its way to true digital transformation, said Laurent Petitmangin, the carrier’s Vice President Marketing, Digital & Communication. Petitmangin said Air France-KLM Cargo has undertaken a project to improve its data quality – an important step toward incorporating more data analytics into its operations.

“We decided to lead the change,” Petitmangin told the packed Digital Transformation track at IATA’s WCS 2017 today, in order to be “closer to the customers.”

Other carriers are following suit. While major carriers are brainstorming ways to get ahead of the digital disruption, a key question remains: Is air cargo moving fast enough?

According to WCS panelists, stakeholders need to pick up the pace.

“Disruption is coming,” said Celine Hourcade, head of cargo transformation at IATA.

Hourcade noted that Amazon’s entrance into air cargo sector was not even regarded as a threat until 12 months ago. “There will be other entrants,” she said, adding that the industry needed to simplify in response.

Mercator announced the launch of their Intelligent Cargo Ecosystem, the industry’s “first open API platform for air cargo management and ground handling.”

The app enables air cargo carriers to connect goods, people, data, and processes to transform their warehousing operations, driving intelligence, predictability, and value. Finnair Cargo has already deployed the app as part of its digital ground handling strategy.

Equipment providers also see the shift, which Dronamics co-founder Svilen Rangelov blamed on consumer expectations.

“The internet has spoiled us,” he said. “Now, we need to be on demand.”

Rangelov’s vision of air freight’s future is “agile,” with exponentially more and smaller aircraft in service, and those aircraft using smaller airfields.

There’s another disruption taking place, which Rangelov called “mobile warehouses.” In addition to more abstract patents filed by the likes of Amazon, Rangelov argued that tests by UPS where drones perform last-mile deliveries from UPS trucks represent new, smaller warehouse models.

Still, will digitization efforts by Air France-KLM and other legacy carriers be successful?

That debate centers around whether carriers and other industry players can innovate past the disruption, or whether they will succumb to it. IATA’s Hourcade noted that for every Silicon Valley disruptor, there were many more that failed to make the cut. She noted that it was IATA’s role to develop standards that help the industry adapt. The organization’s other role, she said, was to provide an overview, “to foster innovation and to the research.”

Champ Cargosystems’ Wojciech Soltysiak noted that the market’s segmentation works against establishing unified standards, but that they remain important. Small- and medium-sized forwarders and shippers have different ways of operating, he said. Citing Brussels Airport as an example, he noted that efforts to unify players happen well at the local community level, where local needs spur unification.

One solution for extensive redundancies and complex communication is blockchain, the technology behind bitcoin that many in the air cargo industry hope will securely track all types of transactions across the supply chain.

The way blockchain works is, every time a shipment changes hands, a blockchain records the transaction, creating a permanent, immutable history that would be visible to everyone. This reduces the time delays, costs, and human error that make air cargo such a complex process. Blockchain would allow the receiver of a shipment to track its entire trajectory, accounting for factors such as temperature deviation and rough treatment.

Hourcade said IATA now sees benefits in blockchain.

“We can see that it’s not a buzzword anymore,” she said.

However, she acknowledged that blockchain is, on the tech level, quite complicated. She stressed that users don’t need to understand it. Not true for IATA.

“I need to understand that it will be an enabler” for smart contracts and improving interactions, she said.

That need is a sign that digital disruption is here.