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  1. Finnair
2 July 2019

Eight Experts Were Asked How Air Cargo Will Develop in 2019

The air cargo industry is in a constant state of transformation but there is always room for improvement. How better to find out what these could be than from the experts themselves?

Finnair interviewed eight air cargo experts to find out where the air cargo industry is heading in 2019.

Head of Cargo and Logistics at Brussels Airport Steven Polmans said: “We should redesign our processes rather than simply try to add digital here and there.

“There are many improvements to be made, but the digitalisation process is the most important in my opinion. We should be much more ambitious and start redesigning our processes for the digital world of tomorrow, rather than see how digital tools can be implemented into our current business model.

“Mailing a pdf or sending a fax is no longer enough. There also needs to be a change in mentality in how we work together, by overcoming company borders and focussing more on the benefit of the chain as a whole rather than just parts of it. This will necessitate a change of processes, but by doing so, the cost will go down for the logistics chain and the quality will go up for the end customer.”

The executive director of the Airforwarders Association Brandon Fried said: “There will be a significant change in forwarding brought by automation’s increased role.

“After a few years of robust activity, air cargo volumes are beginning to show signs of reduced activity in the first quarter of 2019. That said, the industry is in a strong position, and the Airforwarders Association is optimistic about the near future. There is a significant change on the horizon brought about by automation’s increased role in the forwarding world.

“As security regulators impose new rules for advanced preloading data targeting regimes, technology will be essential in assuring compliance. Simultaneously, we hope that governments see the value in leveraging one filing for many trade requirement uses to avoid duplicate entries that create inefficiencies as well as waste resources.”

Head of cargo operations at Finnair Jukka Glader said: “Data should be treated as importantly as the physical product in air cargo.

“I feel strongly that data isn’t being discussed nearly as much as it should be. Data needs to be regarded as an important asset, one that is just as important as every other air cargo process, including the physical aspect, and to be given more visibility to the stakeholders. The air cargo players that recognise this will be the stronger ones moving forward.”

Chief executive officer at Neutral Air Partner Christos Spyrou said: “Air freight procurement needs to be standardised to reduce costs and deliver more value.

“There is a huge difference in the air freight procurement model between continents, so airlines need to standardise this in order to deliver more value to the supply chain and reduce running and sales costs. In Asia, for example, the air cargo supply chain offers and obtains benefits, such as block space agreements (BSA) and capacity purchase agreements (CPA) which are not available in the rest of the world.

“In Europe and the Americas,  on the other hand, every single air waybill (AWB) needs a separate process for procurement, sales, handling, operation, and accounting.

“Digitalisation of air freight sales is easy to implement. However, digitalisation of air freight procurement – with so many different models – need to become standardised across all airlines and general handling agents.”

Freelancer editor and journalist in the Writers for Freight business journal, Air Cargo Week, Air Logistics International and Air Cargo News Chris Lewis said: “The industry needs to bring more certainty to the air freight process.

“There needs to be more efforts in embracing IT and automation in all its facets, including automation of the booking process, the transmission of documents, and tracking and tracing of shipments as they move to the final destination. Other modes of transport, such as container shipping along with the express parcel carriers, have outstripped air freight in this respect so there is some catching up to do.

“The industry also needs to bring more certainty to the air freight process; shippers and forwarders need more confidence that their cargo will fly as booked, and not get snarled up in congested airport handling systems at any point in the journey.”

Managing director of cargo facts consulting at Air Cargo Facts Frederic Horst said: “Two decades worrying about the decline of yields overcapacity and getting rid of paper.

“It’s been almost two decades since I first started in the air cargo business and not a lot has changed – we are still worried about the perpetual decline of yields, overcapacity, and getting rid of paper.

“The last couple of years have been generous to the air cargo industry in terms of profits, where any and everyone was able to make money. But that’s not a normal situation. To be successful going forward, carriers are going to have to be more efficient and better networked than their competitors to do well. Alternatively, they need to focus on a niche – be it geographically or product-wise.”

Editor at The Loadstar Alex Lennane said: “On load factors, airliners are currently underselling by 15-20%.

“One simple way to improve the air cargo industry would be to change the way it calculates load factors. It’s time the industry measured itself against a metric that appreciates its unique characteristics, and not against a derivative measure from the passenger industry. The current methodology distorts the true picture of the market as the load factors appear to be lower than they really are. The industry is currently underselling itself by 15-20%.

“Regulators considering slot allocations at constrained airports, such as Schiphol, believe that cargo capacity is underutilised and therefore don’t feel the need to prioritise freighter flights. Instead, airlines could submit data on load factors based on volume rather than weight alone and create three perspectives of the industry’s capacity utilisation: load factors based on weight, volume, and a combination of the two.”

Chief executive officer at Lodige Industries Philippe de Backer said: “For many air cargo terminals, process modernisation will mean more physical and IT automation.

“I agree with the IATA’s recent analysis that the acceleration of process modernisation is a key priority if the industry is to accommodate the expanding demand for air cargo. For many air cargo terminals, this will mean an increase in physical and IT automation. This is already implemented at Finnair’s Cool Nordic Cargo Hub in Helsinki, and we at Lödige are collecting huge amounts of data for our clients within their terminal. The analysis of this data supports and enables new business processes required to deliver growth targets and respond effectively to the current trend away from bulk to speciality cargo.”

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