Air cargo should be able to guarantee shippers an efficient, high-speed, and transparent service to justify premium rates. But at the moment LSPs are frequently not able to, according to Rogier Spoel, Policy Manager for Air Freight at the European Shippers’ Council.
      He told FlyingTypers that air freight stakeholders need to improve speeds and reduce paperwork to meet the rapidly evolving requirements of multinational and SME shippers.

Same Old Song

      “What shippers are looking for is something we’ve been talking about for years,” he explained. “The major win for air freight is the time it takes to get goods from A to B. But airfreight often takes six days’ door-to-door to the U.S. or Europe from Asia even though the flight is two days, tops. That means cargo is standing still for far too long, waiting to be picked up and cleared. That process needs speeding up. This is why at the moment shippers only use air freight out of necessity for critical shipments, not as an integral part of their supply chain planning.”

 

Transparency Needed

      Many of the delays are due to a lack of supply chain transparency that prevents timely pick-up post-customs clearance at the destination airport. “There needs to be a more analytical process so shippers know how long it will take goods to pass through customs, security, and inspection and can plan the pick-up,” he said. “They want to know when exactly they can expect their freight.”

 

Pathways to Contact

      A reliance on traditional forms of communication also compounds delays. “Air freight communication systems are often very old,” he said. “There is too much paper in the system, which is very much open for errors and mistakes. We already have the capability to do a lot more digitally using datasets and exchanging data to get a closed data stream that would help with transparency so you know where freight is. This is very important for temperature-controlled cargoes such as pharma and foodstuffs, but also reduces the administrative burden and speeds clearance at customs.”

 

Strategies To New Markets

      Mr. Spoel believes changes in how major shippers strategize future supply chain plans will open up new markets and trade flows to air freight stakeholders—but only if they can adapt to the new demands. “Shippers want more predictability in the supply chain,” he said. “Big multinationals have distribution centers throughout Europe. They import goods that are then moved to DCs and from there they supply shops and customers. If they can cut down DCs, which are expensive, they can make huge savings. But to do that they need a floating warehouse, so their inventory is mobile. They need to be able to rely on air and ocean for this.
      “For example, at the moment a big fashion company producing shirts in China ships them to a European DC and then supplies customers and shops through ecommerce. But really, they want to go direct to the shop and customer rather than via their DC. That’s the long-term vision. They’ll still need a DC, but they can cut its size and cost. First, they need that service from the air freight industry so they control the logistics flow of goods accurately.”

Stumbling Processes

      Mr. Spoel said cargo consolidation processes were often the biggest stumbling block, not least because cargo often disappeared into internal LSP systems during the crucial period before the flight, removing transparency for the shipper. “Consolidation is how logistics service providers offer lower prices and that’s the selling point,” he explained. “But there seems to be a misconception that creating transparency will kill the golden goose. As a shipper we don’t want to know everything the LSP does, but they are protective of what they do.
      “Shippers aren’t a threat to them; they just want to see more.”

 

Case In Point

      He said an April workshop organized with telecommunications giant Ericsson, a member of TIACA, revealed some key findings that could illustrate to air freight service providers exactly what customers want—an air cargo data pipeline.
      “The combination of hardware, software, and services that connects trusted users to provide secure, fast, and reliable data exchange in logistics increases business efficiency, reduces margins of errors, and increases safety,” said Spoel.
      “This is a goal for all.
      “Why hasn’t this goal been achieved yet?”
      He said impediments included the incompatibility of legacy systems, strict oversight by competition authorities, cyber security and privacy rules, compliancy, and the cost of investment in new systems.
      Spoel said Ericsson told attendees it was currently losing a lot of money due to ineffective air cargo supply chains and so was currently working on ideas aimed at the creation of a digital and data backbone—in effect, a digital supply chain stream operating alongside the physical supply chain used to monitor and exchange information with the cargo and all stakeholders.
      “The idea of the Global Unique Identifier presented by Ericsson demonstrated that there are already tools available that bring the concept of the data backbone to reality,” he said. “Ericsson’s Global Unique Identifier tool allows, with one single ‘license plate’, to link shipments on a product level with the adherent data available in a cloud-based solution.”
      Using this system, the shipper provides the source data about the cargo, rather than various stakeholders copying this information across numerous paper forms along the supply chain.
      “This enables a shipper to bring all its data into the system and track and trace their goods,” said Spoel.
      “So the source data is always leading.
      “At the moment in the supply chain, information is constantly copied by different stakeholders and quite often the description changes when copied, which is inefficient and also a safety and security problem if, say, dangerous goods are re-classified by accident as general goods.
      “So if the shipper leads and is the only one who enters the goods information, then it’s easier to monitor.
      “And if the shipper gets the information wrong, it’s clear it’s their fault when it’s spotted.
      “Take these mistakes out of the supply chain and it will be leaner and meaner, which will be good for shippers and service providers.”
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