We live in a technology-driven world where even the simplest of tasks can be performed with a touch of a button. In this digital age, information can be shared over the internet instantaneously, bringing the world closer in rapid fashion. Particularly for the air cargo supply chain, an improved means of data-sharing can provide real-time visibility for the industry; resulting in a quicker and better organized system. That is only if data is willingly shared.

“The cargo industry had not participated in the digital revolution very as much and was fragmented by legacy technology. Th e limit to transformation is not the technology itself but the appetite to change within the industry. We (digital service providers) must do a better job to allow you as carriers and freight forwarders to be braver,” said chief executive officer of Mercator, Cormac Whelan, when he spoke at the 11th edition of the IATA World Cargo Symposium.

“The technology exists today where an air waybill, through the emergence of radio frequency ID, near field ID and the evolution of sensor, technology can talk to you. We are not leveraging that in the cargo ecosystem, and we need to work harder.”

 

Digital: the new industry standard?

The digitisation of air cargo was a hot topic at the symposium, with a call for software providers to push carriers and forwarders to speed up their adoption of digital technology. McKinsey & Company associate principal, Emma Loxton, described how companies can tackle disruption in their industries by leveraging on present opportunities. She foresees digitalisation taking place in three stages.

The first being setting digital foundations, which comprise of the way data can be used. Secondly, what players can do to standardise and make operations and digitisation easier, and how operating models can be digitised. This includes the introduction of product innovation,

integration across value chain and the capitalisation of advanced analytics on data. Lastly, to recognise the business’ role in the new digital era and how the business model will have to evolve.

The Internet of Things (IoT) provides a platform for interconnectivity across different assets along the supply chain. New insights can be captured by analysing data, enabling logistics providers to operate more efficiently and creating customized, dynamic and automated services for customers. This will result in reduced cost of device components with quicker wireless networks and increased data processing capabilities. The technology can also automate shipping and delivery estimates through real-time tracking and tracing.

By feeding its cloud data stream of any delays or scheduled maintenance, a more productive route can then be mapped out to speed up the supply chain; ensuing fuel and cost efficiency. With trackable temperature and data via connected sensors, pharmaceutical companies and cargo personnel may monitor and have better control over shipments of electronics, pharmaceuticals or perishables.

“We need more transparency for stakeholders in the value chain,” says Janne Tarvainen, managing director of Finnair Cargo. “Th is is important for special and high value cargo with particular needs.”

However, adopting digitalisation is no easy feat. “We realized that only half of the air cargo-related messages came without discrepancies. Not a good thing when the system is extremely quality conscious regarding data. Subsequently, our customers faced delays impacting cargo shipments,” Tarvanien elaborates. “We had a world-class system, but we were not able to fulfi l our own service standards. Recovery required a lot of prompt action, and manual steering and coordination with our stakeholders and customers.”

Today, Finnair has a solid digital platform in place for the new COOL Nordic Cargo hub at the Helsinki airport that is scheduled to open in May 2017. Tarvainen says, “We will have a high level of automation in an integrated acceptance and storage system, with unit load devices. Th is will be a unique integration and when it opens we will have the most modern air cargo terminal in Europe.”

Excellent data management is necessary for increasing the quality and speed of services and/or introducing efficient and value added cloud-based on-line interfaces for customers and authorities.

 

The future of digitisation

A recent trend report by Mckinsey & Company predicts that a fully digitised sales and customer-service experience will become the industry standard and set the expectations of customers. Th e report also foresees carriers to disintermediate forwarders, pushing direct shipper– carrier bookings up to 15 to 20 percent, from less than 5 percent today.

Furthermore, analyst fi rm Gartner forecasts that by 2020, there will be over 26 billion connected devices. IoT is also predicted to save consumers and businesses $1 trillion a year in maintenance, services and consumables by 2022, through the usage of digital twins. Th ese computerized companions of physical assets will be able to capture real-time data that allows for smarter maintenance and service schedules for physical objects such as airframes and turbines.

“Digital twins capture real-time data, allowing smarter maintenance and service schedules for physical objects such as large pumps, airframes and turbines. When the sensor-enabled real world twin sends data to the digital twin, it can simulate the physical state, allowing the digital twin to be inspected instead of the physical object,” the report details. Th is piece of new technology will be especially helpful in the event of resolving a physical problem where on-site inspection is inconvenient, costly or hazardous.

 

Blockchain technology:

Blockchain technology is beginning to play a major part in IoT by improving security and incorporating low-value devices to simplify managing devices. Information held on a blockchain exists as a current and shared database that isn’t stored in any fi xed location. Hacking threats are minimized since no centralized version of the information exists to be corrupted.

Information is in turn, held on multiple computers at the same time – data is streamlined, transparent and accessible via the internet. This will enable the creation of secure networks, where IoT devices will interconnect in a reliable way, avoiding threats in the form of device spoofi ng and impersonation.

Last September, IATA and Capco began exploring blockchain technology. Th e joint research includes the analysis of numerous case studies on blockchain technology developed in other industries – which could potentially be implemented within financial services in the near future. Iván Martín, Head of innovation, financial and distribution services at IATA says: “the value of having a single ’source of truth’ that all business partners trust can dramatically simplify reconciliation, invoicing and settlement in our industry.”

“Blockchain is a disruptive technology and represents a great opportunity for digital innovation. Every single industry, from the fi nancial sector to aviation, is trying to understand where this technology will best fi t and where to start the innovation journey. Distributed ledger technology – including blockchain – has already proven to reduce transaction fees when transferring money across borders and currencies,” said Assad Mahmood, Senior Consultant at tech consultancy, Capco. “Th at represents a great promise, particularly for global businesses and industries.”

 

Automation and advanced robotics

Shippers are redesigning their global production networks, pushing the need and demand for change in the air cargo model. New networks are introducing automated warehouses, predictive shipping and unmanned-aerial-vehicles (UAV) for last-mile deliveries and pickups. Th e drones are able to provide a faster and more costeffi cient way of making deliveries, in a less labour-intensive and timely fashion.

Last September, DHL announced that it had successfully concluded a three-month test of its third Parcelcopter generation, dubbed the Parcelcopter Skyport. Th is represents the fi rst time that a parcel service provider has directly integrated a parcelcopter logistically into its delivery chain.

During the trial period, shipments were inserted into the Skyport to initiate automated shipment and delivery per Parcelcopter. Each round trip from valley to plateau (about 1,200 meters above sea level) covered eight kilometres of fl ight. Th e drone’s cargo arrived within eight minutes of take off ; via car, the same trip would take more than 30 minutes during winter. Ultimately, a total of 130 autonomous loading and unloading cycles were carried out.

Jürgen Gerdes, Management Board Member for Post – eCommerce –Parcel at Deutsche Post DHL Group says, “With this combination of fully automated loading and unloading as well as an increased transport load and range of our Parcelcopter, we have achieved a level of technical and procedural maturity to eventually allow for fi eld trials in urban areas as well.”

Equipment providers are noticing the shift which Svilen Rangelov, Co-Founder and CEO of UAV maker, Dronamics, blamed on consumer expectations. According to him, drones can be more fuel-efficient than cargo airplanes, enable same-day international delivery, empower communities worldwide, revolutionise e-commerce and reinvent trade. With drone technology, the traditional supply chain model would go from source-truck-airplane-hubairplane- truck-destination to sourcedrone- destination. This on-demand model will reduce modality, time, cost and complexity; resulting in satisfi ed customers.

Dronamics’ fi rst working prototype, the “Black Swan”, is about to have its fi rst test fl ight, and Rangelov said he discovered a need for the technology for people in remote communities who cannot aff ord modern air cargo rates. Rangelov foresees an “agile” future for air freight where a signifi cant number of smaller aircraft units with smaller airfi elds will be in service. Th ese could all be managed via automation, including an automated air traffi c control. Th e big question is how all of these can be produced, operated, integrated and regulated.

In addition to that, “mobile warehouses” are also causing disruption in the industry. Th is warehouse model has been explored by players such as Amazon and UPS, where drones are being used to perform last-mile deliveries.

Granted last December, Th e Amazon Technologies Inc. patent fi ling describes its ‘airborne fulfi lment centres’ (AFCs); comprising of a large and robust fl ying drone made up of numerous smaller drones, designed to make long-distance fl ights or to carry heavy packages.

Dubbed a giant ‘fl ying warehouse’, the AFC is described to utilize unmanned aerial vehicles (UAV) to deliver items to its users. Individual modules could detach from the collective drone body once no longer required, and operate independently to deliver smaller burdens. Th e fi ling reports: “For example, the AFC may be an airship that remains at a high altitude of 45,000 feet and UAVs may be deployed from the AFC to deliver ordered items to user designated locations.

“As the UAVs descend, they can navigate horizontally toward a user specified location using little to no power, other than to stabilize the UAV and/or guide the direction of descent. Shuttles (smaller airships) may be used to replenish the AFC with inventory, UAVs, supplies and fuel. Likewise, the shuttles may be utilized to transport workers to and from the AFC.”

It is an undisputable fact that new innovations and technologies are rapidly turning the tables on the traditional air cargo supply chain model. Th at however does not necessarily mean that it is disruptive. In this day and age, it is almost inevitable for us to not advance at the rate of technology’s growing prominence. As an industry, we now have to ask ourselves – is technology truly disrupting the air cargo industry or is it handing us opportunities to capitalise on?