The Air Cargo Industry is Woefully Behind in Adopting Technology
In an age where every sector seems to be moving in fast forward with regards to embracing new technology, the air cargo industry is, by comparison moving at a snail’s pace. The issue came to a head at the recent Air Cargo China event in Shanghai on May 17th when Lufthansa Cargo chief commercial officer Alexis von Hoensbroech stated the air cargo industry’s track record with regards to new technology was “embarrassing”.
“Although there are many ideas on what technology can bring, the ability of this industry to embrace change is actually very slow. We’re full of buzzwords and everybody talks about them without really knowing what’s behind it,” he said.
In a panel discussion on the future of the air cargo industry, von Hoensbroech went on to say that the industry as a whole could save billions by automating transactions. He indicated that his research shows that approximately 70% of current transactions can and should be automated using robotics or artificial intelligence. “In my opinion 70% of the quotes we give out today are available for such robotics and artificial intelligence and I think that if we could get that then we could save a huge amount of manual work and this could cut $1bn-2bn from the air cargo supply chain just by optimizing this type of transaction, so there is huge potential.” He said.
He went into detail, presenting an example where a shipper emailed a group of forwards with an RFQ. The forwarders contact their airline partners, review and send to the shipper. The shipper reviews, compares and makes his decision. The time and effort involved with all the back and forth, combined with the unreliability of traditional emailing is where the waste occurs, while platforms like airfreight.bid are available to streamline this process.
Others, including Turkish Cargo chief cargo officer Tarhun Özen agreed, adding that the industry as a whole is fragmented, which hampers efforts to get everyone from the forwarders through trucking companies working together.
By way of presenting a solution von Hoensbroech said the first step should be to embrace electronic air waybills (e-AWBs). “People started talking about them in the late nineties, but it took more than a decade to actually turn the idea into a product. Now in 2018, we’ve just achieved 50% e-AWB penetration. This is 20 years after we started talking about it. It’s a really embarrassing performance in terms of implementation.” said von Hoensbroech. Taking this first step opens the door for further implementation of modern digital communications in the air cargo industry.
Perhaps as motivation for forwarders to move away from paper and into the digital realm, in March of this year, Lufthansa Cargo introduced a surcharge for freight forwarders that use paper-based waybills. The surcharge, which will start at approximately $1.20 this month and rise to $14 by October is a fee Lufthansa says it don’t want to collect. “We don’t want to make money on this, we don’t want to collect this fee. We want to collect e-AWBs.” von Hoensbroech said.
Time will tell if forwarders will embrace the inevitable digitization of the air cargo industry, but ECS Group CEO Adrien Thominet may have put it best when he said, “When we show the ‘i-generation’, who were born in the 2000s, our customer service and tell them they will receive and email from a forwarder, or ten forwarders, for the same quote, they question why it is not automated. They are surprised that they will need to answer the email. We look like dinosaurs in front of them. They are pushing us to re-think and change our mindset.”
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