#INTHEAIREVERYWHERE

If you think remembering who won airline of the year at that awards banquet at Air Cargo Europe is tough to remember, try remembering a single detail from even one discussion session at Air Cargo Europe 2013.
     Yes, we are speaking 2013, but honestly, unless you were there, you probably missed it.
     As far as we can tell almost nobody covered this content post-conference, unless you count those endless pages of typed comments or transcripts that are made available on the show website … if you can find them.
     So we began to wonder: why keep setting up panel discussions about the same topics at these trade shows only to see most of the air cargo business ignore the talk, whilst another batch of keynotes and panel discussions are set up two years later that will end up in the same ignored place?
     It sounds to us like many in air cargo who labor to bridge understanding and educate best practices are involved in a dead heat on a merry-go-round.
     But in a “past is prologue” move, FlyingTypers looks back two years and tries to connect some of what we heard this time in Munich.

ACE 2013 Talking Points

     To recap on ACE 2013 and the key messages from that conference:
     Dr. Andreas Otto, member of the Executive Board Product and Sales, Lufthansa Cargo AG, who today serves as CCO of Austrian Airlines, delivered an address to ACE.
     Dr. Otto said he felt the opportunity for digitization is a real chance for our industry.
     However, the results are disappointing. The industry produced 22.4 million air waybills in 2012; of these, eight million were potential candidates for e-freight, but in reality 0.2 percent were flown as e-freight shipments.
     Dr. Otto then in 2013 mapped the progress of e-ticket:
     The first e-ticket in 1994, 19 percent penetration in 2004, 100 percent penetration in 2008, a total of 14 years from start to finish.
     Compare that with e-freight: first e-freight shipment in 2009, 0.1 percent in 2013, target 100 percent in 2015.
     Moving forward, Dr. Otto insisted that the industry must embrace this way of doing business and not ask ‘what’s in it for me?’
     Finally Dr. Otto outlined the e-strategy for Lufthansa, building the business on a series of e-channels including e-offering, e-freight, e-pieces, e-spots, e-boarding, e-customs, e-tracking, and e-disputes, ending with the statement, “In 2020 I will be digitally networked with all participants in the logistics chain.”
     Another speaker, Prof. Dr. J. Rod Franklin, P.E., managing director, Executive Education Adjunct Professor of Logistics, The Kühne Logistics University opened a panel at Air Cargo Europe in 2013 by suggesting the following areas could be ripe for innovation:
               1.   Systems: suffering from a lack of integration; outdated technology and designs; address yesterday’s issues and are inappropriate.
               2.   Processes: air cargo processes have not fully adopted modern lean approaches. They lack customer focus in design.
               3.   People: they are not incentivised to innovate. Many are trained to be operational and not trained in creative thinking.
               4.   Technology: air transport companies are under pressure but have not upgraded their technologies, i.e. ageing and outdated equipment.
               5.   Infrastructure: airports are optimized for passenger handling and not for cargo handling.
     
      The panel’s reaction to the above statements came in the form of the following ideas:
               1.   More focus needs to be put on the value that air cargo brings to the communities. IATA’s current education campaign is a step in the right direction.
               2.   Look at what other industries are doing. Change the mind-sets of our people to embrace technologies.
               3.   Small innovations can really make a difference. Two examples:
                    a. The local replacement of handheld terminals for barcode reading. Large, cumbersome, expensive hand-held devices with a battery life of six hours that required constant changing and recharging were replaced with a small application on a smart phone.
                     b. People would occasionally miss their train because of the queues at the automatic ticket dispenser. The company developed a small application that resided on a smart phone that allowed people to buy tickets using their credit card, which removed the need to queue.
               4.   Don’t be bound by the corporation. Look at innovative solutions that can be done locally and cheaply. More balanced risk taking. Local business cases for local implementations, small entrepreneurial companies can assist.
              5.   The industry has shown it can move quickly, but only if it needs to. Such had been the case with the implementation of AMS in the U.S. and ICS in Europe. However, this had been seen to be reactive and not proactive.

     Another 2013 ACE panel asked the question: What can air cargo learn from other sectors, within or beyond the logistics/supply chain sector?
     The panel felt we could certainly learn from our passenger and travel colleagues.
     For instance, their model for electronic ticketing guarantees 100 percent penetration and very few data quality issues, as the ticketing data is validated by the airline before the ticket is issued, unlike the current e-AWB process.
     The panel also felt that air cargo industry lacks transparency when compared to other industries.
     Shippers, in particular, want to see more done by the airlines and forwarders and a far more proactive approach.
     Some other topics of conversation included:
          Q.   Is air cargo preparing for the last generation of messaging requirements, or the next?
          A.   The panel felt that the content and quality of the message is actually more important than the format, although it would be good to see convergence on one standard. i.e. XML, for all modes of transport including air.
     Since single window providers have also embraced XML. members of the panel felt this to be the right move with some technology providing already supporting XML standards.
     Migration, however, may take some time, and maintaining two standards may be required after IATA withdrew support for Cargo-IMP. Finally the panel felt that e-business should really be the norm and rather than look for returns on investment, the message is to get with the e-program or risk being obsolete.
          Q.   Should air cargo companies leave it to IATA and Cargo 2000 to dictate the terms and lead the way in terms of messaging, or should technology companies be taking the lead?
          A.   The 2013 panel felt it should not be left to IATA and Cargo 2000 to drive messaging. IATA and C2K are there to provide standards, and technology providers are responsible for adopting those standards. However, business leaders must drive the implementation. One school of thought suggested that C2K could perhaps promote the C2K Master Operating Plan to a wider audience.
          Q.   What information will shippers need to exchange in 5 years/10 years?
          A.   Shippers still want to see far more transparency in terms of the information that is shared with them and service providers should be investing in these areas. For instance if a shipment is delayed or offloaded, the shipper should be notified and the recovery plan shared. Furthermore it is hoped that shippers will not need to exchange information in years to come and that electronic documents will be stored on servers that can be accessed via links. Some technology companies have implemented similar systems already.
          Q.   Do the e-commerce, social networking, and smartphone revolutions require a response from the air cargo sector, and if so, what should that response be?
          A.   A study commissioned by IATA predicts that by 2017 50 percent of passenger bookings will be made using smartphones. It will be interesting to see how many air cargo bookings will be made in 2017 using this medium. With a growing number of smart phone users in the world with a short attention span, the smartphone will become the medium for doing business. Some airlines have recognized this and have already implemented track and trace for smart phones. The air cargo industry cannot ignore this trend.

2013 to 2015

     If you are thinking that these panel discussions sound relevant, and as if they could have taken place this year at Air Cargo Europe, you will get no argument from us.
     Again, we present these words as indication that it seems no matter how much we say, when it comes to the IT and paperless movement in air cargo we are still talking, and clearly having trouble finding our way.
     But point for point, there is lots of food for thought and some good ideas from 2013 that bear review and adoption, or at least should not be lost in time.
     As much of our conversations and thoughts led back to these same subjects when we met in Munich this year, these thoughts and ideas from 2013 should join the takeaway mix from 2015.
     Let’s all move forward, smarter, FlyingTypers says!

How Can Air Cargo Move Ahead?

     We asked one person, who was part of the 2013 panels and also operates a big company with much at stake in IT, to comment.
     Patrick Murray is head of Dubai-based Calogi.
     As we have often said, Patrick is about as smart and thoughtful as it gets in the air cargo IT game.
          Q.   So what did or is Calogi doing with this valuable feedback from 2013 ACE?
          A.   We at Calogi have taken a fresh look at the way we do e-business, recognizing that the key is to offer the forwarder a better solution. dnata cargo has taken the responsibility to print the air waybill at the terminal.
     "We took this decision to prevent many of the small forwarders from having to invest in a heavy-duty printer.
     "We make an online A4 copy of the air waybill available to both the forwarder and the airline should either feel the need to view or print the same.
     "Furthermore, should the airline nominate the shipment as an e-AWB, by sending the code ‘ECC’ in the FWB message to dnata, we will suppress the air waybill print—very simple and very effective.
     "The major challenge we have now is how do we change the electronic data once it has been submitted to the airline. If a forwarder submits an FWB with incorrect consignee details, how does he change the details?
     "Since the Charges Correction Advice (CCA) deals mainly with the weight and charges, perhaps we need to extend the scope of this document to include other data elements.
     "The second concept Calogi is currently embracing is the options for self-service and reducing the need for a customer to visit the dnata counters.
     "This is very much a work in progress, but we are making headway.
     "The key is to simplify the acceptance and delivery process and then build the solution. More to follow on this…
     "Third, we have heard calls for transparency of shipment status and we fully agree.
     "Focusing on customer needs is what we do best, and we plan to give forwarders and airlines a window into our handling system.
     "This allows them to view ‘real-time’ status of the shipment and to make decisions based on the same.
     "Once again, this is work in progress, and we will be sharing more details as we move forward."

Dr. Alexis & The Quote of ACE 2015

     Overall, can anyone question or doubt the statement of Lufthansa Cargo Board Member, product & Sales, Alexis von Hoensbroech, as he delivered the Keynote 2015 at ACE?
     Dr. Alexis said a lot of things, but one sentence rang bold and clear:
     “While there are several initiatives today—including these IT sessions at Air Cargo Europe—my take is that it is really time for air cargo to move on into the new century and embrace a digital solution.
     “Put another way—if we don’t do it, then others will do it for us!
     Just after Alexis said those words, I remember it started to rain inside the meeting hall.
     My first thought was that the words with the water might be a wakeup call arranged and coordinated to maximize effect, but as it turned out, there was just a leak in the ceiling.
     But I thought the combination drove the point home.
     FlyingTypers believes the industry has been guilty of looking inwards, focusing more on what we need to develop to run our business rather than starting from the customer and looking at their needs.
This is really where the Alibaba and Amazon e-commerce sites have taken the game to a much higher level, which brings us quite nicely to 2015 and the recent ACE conference.
     Taking just one agenda item that stood out for us: ‘e-Commerce in Airfreight: Possibilities and Priorities’
     The introduction to that session was as follows :
     How can airfreight take full advantage of the e-Commerce revolution? Can it adapt its processes, services, and tracking to become a more attractive partner for e-Commerce shippers? What changes would that require and what would be the potential benefits, realistically? Might big e-Commerce firms such as Amazon or Alibaba take matters into their own hands? And how can airfreight use the lessons and potential of e-Commerce to optimize its own processes, for example via integrated web applications for quotations, booking, and tracking services?
     Bernd Maresh, owner of Maresch GmbH, moderated the session with the following participants:
Guillaume Drucy, head of Cargo e-Business Management, IATA; Frank Naeve, program manager e-Cargo, Lufthansa Cargo; Tim Scharwath, executive vice president Air Logistics, Kühne & Nagel; Tobias Seidler, Supply Chain Services, Fraunhofer Institute; David Yokeum, president, WCA Ltd. and Marcus Fromm, managing director, Accenture Freight & Logistics practice.
     Without wishing to take anything away from the panel, here is our take on those questions:
          Q.   How can airfreight take full advantage of the e-Commerce revolution?
          FT.   The e-Commerce revolution is a paradigm shift. For an airline/freight forwarder, the traditional customer changes to the e-Commerce provider such as Amazon or Alibaba. A key element to be considered by IT providers is that the e-commerce providers will not want to log into several systems to do business with their suppliers. Those forwarders or airlines able to integrate seamlessly with e-commerce systems will be the players who will win the business.

          Q.   Can IT adapt its processes, services, and tracking to become a more attractive partner for e-Commerce shippers?
          FT.   It (the air cargo industry) must adapt its processes and must shield the customer from the complexities of the air freight business. An e-Commerce customer wants to make an order, pay by credit card or account, and know that the shipment will be delivered on a certain date and time. He will not care if it is shipped with an e-AWB or what the fuel and security charges are. He doesn’t even need to track the goods; that is an internal issue for the air cargo industry and needed to ensure predictable delivery.
     He will care, however, if the goods do not arrive on time.
     Deliver as promised will be a key goal for a successful supplier.
          Q.   What changes would that require and what would be the potential benefits, realistically?
          FT.   A large part of this would be the ability for the forwarder to consolidate shipments and provide door-to-door service at competitive rates. Take the ordering of DVDs or books for instance. Transporting and clearing these items through customs on an individual basis would be extremely time consuming and costly. FT believes that integrators are packaging these shipments into larger consignments and working with Customs authorities to bulk clear these commodities.
     The benefits are that it’s a great, fast flowing line of business.
     Someone must be making money from the transportation, so why not the traditional forwarders and airlines?
          Q.   Might big e-Commerce firms such as Amazon or Alibaba take matters into their own hands?
          FT.   Undoubtedly, and it’s probably just a question of time. How long before we see mini-landing strips for larger drones at manufacturing and distribution centers? Inventories can be kept very low. As soon as the drone is fully laden, send it on its way.
          Q.   How can airfreight use the lessons and potential of e-Commerce to optimize its own processes, for example via integrated web applications for quotations, booking, and tracking services?
          FT.   Integrated web applications already exist.
     In fact, for the last seven years, as Patrick Murray points out, Calogi has allowed airlines to quote rates, allowed forwarders to make e-bookings, and made online tracking available to customers; nothing really new there.
     “Our unique credit management system and air waybill release scheme allows us to settle over $10M USD in airline and Ground Handling Agent dues per month,” Mr. Murray said.
     “The next real metamorphosis for Calogi and elsewhere would be to act as the middleman between the e-commerce providers and the service providers for booking, pricing, milestone tracking, and exception handling,” he added.

Final Words

     In the words of Leon C. Megginson, fellow of the Academy of Management (1973), the North American Case Research Association (1990), and the Southern Management Association (1995).
     “It is not the strongest or the most intelligent who will survive but those who can best manage change.”
Geoffrey