CNS 2018: Air cargo community faces challenges in executing digitalization

PALM SPRINGS, CALIF. – The issue on everyone’s minds here at the CNS Partnership Conference is the prevalence of e-commerce in today’s logistics industry. The e-commerce boom may be breathing life back into airfreight, but industry leaders are now experiencing major growing pains as a result.

To address these concerns, Glyn Hughes, the global head of cargo at IATA, moderated a discussion Monday morning on current trends and concerns in the industry, joined by a panel of industry leaders from carriers, logistics companies, and freight forwarders. The panel consisted of Fred Ruggiero, vice president of cargo in the Americas at Cathay Pacific; Sanne Manders, COO at Flexport; Michelle Halkerston, CEO of Hassett Express; Phil Coughlin, chief strategy officer of Expeditors International of Washington; and vice president of Delta Cargo Shawn Cole.

Expeditors’ Coughlin pointed to one of the major issues of e-commerce, saying that the phenomenon “is going to continue to change the way the world buys, sells and transfers,” but then posed the question, “How are we actually going to deal with e-commerce in urban areas?” referring to issues like the driver shortage and increasingly limited capacity at airports.

While e-commerce has been a pillar in boosting demand for airfreight, the expectation that it is delivered quickly and at low cost presents problems for all involved. Regarding digitization, Ruggiero reminded the audience that the whole point of “digitalizing” boils down to efficiency. “We have to make up costs somewhere, and one of the ways is e-air waybills [e-AWBs].” He also highlighted the contrast in technological advancement between the passenger and cargo sectors, and asked why there is such a discrepancy between the two sectors. “It’s slow — very slow and very frustrating. The e-air waybill is the first step of it. We can’t do anything else before we establish the use of them.”

Brandon Fried, chairman of the CNS Advisory Board and contributor to Air Cargo World, asked the panel what grade they would give airlines in terms of readiness to accept e-airway bills and their willingness to plug into digital systems, to which Manders of Flexport responded with a story. He said Flexport’s airfreight warehouse in Hong Kong requested expedited approval for the purchase of a printer for AWBs. “I said, ‘I’m sorry, you’re fired,’” Manders joked, “and he said, ‘No, we really need it! We really need it, because the airlines are not accepting our e-air waybills,’” the point of the story being that their effort toward digitizing was entirely futile in terms of efficiency, at least in this scenario. “So that’s my grade.”

Halkertson said that Hassett Express has embraced digitalizing its trucking operations, but so far, has experienced technology hindering its efficiency more than helping it. “It gives us immediate visibility of where our drivers are, but in the short term, there is pain,” she says of the software Hassett has integrated. “The software itself… has had four updates in three months. Some of them can be done over the road, but some of them have to come back. It’s hurting capacity right now.”

There was some debate as to exactly why it’s taking so long for the industry to adopt digital practices and whether they are as beneficial as they are expected to be, but there seemed to be a consensus that no one party involved is to blame for the struggle at hand. With such a complicated, well-established process ingrained in the supply chain, there is a struggle for the vast network of third-parties to move forward together as a unit, to which Delta Cargo’s Cole said, “We need to trust each other to create value. This stuff is coming and are we going to be on the right side of it.”

Looking forward, Coughlin commented on the industry’s reputation as being somewhat archaic. “Nothing could be further from the truth. We certainly have a long way to be go, but I wish we thought of ourselves more in a positive light.”